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Document of

The World Bank Report No: ICR00003931

IMPLEMENTATION COMPLETION AND RESULTS REPORT

(IBRD-72910)

ON A

LOAN

IN THE AMOUNT OF US$120 MILLION

TO THE

ARAB REPUBLIC OF EGYPT

FOR AN

EGYPT-INTEGRATED IRRIGATION IMPROVEMENT AND MANAGEMENT PROJECT

DECEMBER 15, 2016

Water Global Practice

Egypt Country Management Unit

Middle East and North Africa Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective October 28, 2016)

Currency Unit = Egyptian Pound (EGP)

EGP 1.00 = US$0.1129

US$1.00 = EGP 8.8574

FISCAL YEAR

July 1–June 30

ABBREVIATIONS AND ACRONYMS

BCWUA Branch Canal Water Users Association

CAS Country Assistance Strategy

CF Conversion Factor

CPF Country Partnership Framework

DWB District Water Board

ERR Economic Rate of Return

ESMP Environmental and Social Management Plan

FM Financial Management

GOE Government of Egypt

IAS Irrigation Advisory Service

ICR Implementation Completion and Results Report

IIIMP Integrated Irrigation Improvement and Management Project

IIP Irrigation Improvement Project

IIS Irrigation Improvement Sector

IWMD Integrated Water Management District

IWRIGD Integrated Water Resources and Irrigation General Directorate

KfW German Development Bank (Kreditaustalt fur Wiederaufbau)

LLL Laser Land Leveling

LTA Land Tax Authority

M&E Monitoring and Evaluation

MALR Ministry of Agriculture and Land Reclamation

MEE Ministry of Electricity and Energy

MTR Midterm Review

MWRI Ministry of Water Resources and Irrigation

NDC Netherlands Development Cooperation

NPV Net Present Value

O&M Operation and Maintenance

PAD Project Appraisal Document

PDO Project Development Objective

PMU Project Management Unit

RAP Resettlement Action Plan

RCU Regional Coordination Unit

RPF Resettlement Policy Framework

SSD Subsurface Drainage

SWM Solid Waste Management

TA Technical Assistance

TF Task Force

WMRI Water Management Research Institute

WUA Water Users Association

Senior Global Practice Director: Guang Zhe Chen

Country Director: Asad Alam

Practice Manager: Steven N. Schonberger

Project Team Leaders: Bekele Debele Negewo, Abdulhamid

Azad

ICR Team Leader: Heba Yaken Ahmed

ARAB REPUBLIC OF EGYPT

Egypt-Integrated Irrigation Improvement and Management

CONTENTS

A. Basic Information ........................................................................................................................ i B. Key Dates .................................................................................................................................... i C. Ratings Summary ........................................................................................................................ i D. Sector and Theme Codes ............................................................................................................ ii E. Bank Staff .................................................................................................................................. ii

F. Results Framework Analysis ..................................................................................................... iii G. Ratings of Project Performance in ISRs ................................................................................. viii

H. Restructuring (if any) ............................................................................................................. viii I. Disbursement Profile………………………………………………………………………… ix

1. Project Context, Development Objectives and Design ............................................................... 1 2. Key Factors Affecting Implementation and Outcomes .............................................................. 5

3. Assessment of Outcomes .......................................................................................................... 10 4. Assessment of Risk to Development Outcome ......................................................................... 16

5. Assessment of Bank and Borrower Performance ..................................................................... 16 6. Lessons Learned........................................................................................................................ 19 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners........................... 21

Annex 1. Project Costs and Financing .......................................................................................... 23 Annex 2. Outputs by Component.................................................................................................. 24 Annex 3. Economic and Financial Analysis ................................................................................. 27

Annex 4. Bank Lending and Implementation Support/Supervision Processes ............................. 38 Annex 5. Beneficiary Survey Results ........................................................................................... 40

Annex 6. Stakeholder Workshop Report and Results ................................................................... 41

Annex 7. Summary of Borrower’s ICR and/or Comments on Draft ICR .................................... 42 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................................... 51 Annex 9. List of Supporting Documents ...................................................................................... 53 MAP .............................................................................................................................................. 54

i

A. Basic Information

Country: Egypt, Arab Republic of Project Name:

EGYPT-Integrated

Irrigation Improvement

and Management Project

Project ID: P073977 L/C/TF Number(s): IBRD-72910

ICR Date: 11/28/2016 ICR Type: Core ICR

Lending Instrument: Specific Investment Loan Borrower: ARAB REPUBLIC OF

EGYPT

Original Total

Commitment: US$120 million Disbursed Amount: US$120 million

Revised Amount: US$120 million

Environmental Category: B

Implementing Agencies: Ministry of Water Resources and Irrigation, Egypt

Cofinanciers and Other External Partners: Kreditanstalt fur Wiederaufbau (German Development

Bank) and the Netherlands Development Cooperation

B. Key Dates

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 06/25/2002 Effectiveness: 05/02/2006 05/02/2006

Appraisal: 02/24/2005 Restructuring(s):

10/14/2012

03/31/2014

01/17/2016

Approval: 05/12/2005 Midterm Review: 02/29/2012 06/05/2012

Closing: 03/31/2014 03/31/2016

C. Ratings Summary

C.1 Performance Rating by ICR

Outcomes: Moderately Satisfactory

Risk to Development Outcome: Moderate

Bank Performance: Moderately Satisfactory

Borrower Performance: Moderately Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)

Bank Ratings Borrower Ratings

Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory

Quality of Supervision: Moderately Satisfactory Implementing

Agency/Agencies: Moderately Satisfactory

Overall Bank

Performance: Moderately Satisfactory

Overall Borrower

Performance: Moderately Satisfactory

ii

C.3 Quality at Entry and Implementation Performance Indicators

Implementation

Performance Indicators

QAG Assessments (if

any) Rating

Potential Problem Project

at any time (Yes/No): No

Quality at Entry

(QEA): None

Problem Project at any time

(Yes/No): Yes

Quality of Supervision

(QSA): None

DO rating before

Closing/Inactive status:

Moderately

Satisfactory

D. Sector and Theme Codes

Original Actual

Sector Code (as % of total Bank financing)

Central Government (Central Agencies) 4 4

Irrigation and Drainage 94 94

Sanitation 1 1

Waste Management 1 1

Theme Code (as % of total Bank financing)

Decentralization 13 13

Participation and civic engagement 25 25

Rural policies and institutions 13 13

Rural services and infrastructure 25 25

Water resource management 24 24

E. Bank Staff

Positions At ICR At Approval

Vice President: Hafez M.H. Ghanem Christiaan J. Poortman

Country Director: Asad Alam Emmanuel Mbi

Practice Manager/Manager: Steven N. Schonberger Narasimham Vijay Jagannathan

Project Team Leaders: Bekele Debele Negewo

Abdulhamid Azad Jose Simas

ICR Team Leader: Heba Yaken Aref Ahmed

ICR Primary Author: Heba Yaken Aref Ahmed

iii

F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document) The overall project objective is to assist the Borrower in improving the management of irrigation and drainage in

the project area in order to increase the efficiency of irrigated agriculture water use and services.

(a) PDO Indicator(s)

Indicator Baseline Value

Original Target

Values (from

approval

documents)

Formally

Revised Target

Values

Actual Value

Achieved at

Completion or

Target Years

Indicator 1: Water productivity (kg/m

3) increase for main crops (wheat, cotton, rice, maize and

berseem) (%)

Value 0 n.a. 20% 15%

Date achieved January 2006 03/31/2014 03/31/2014 03/31/2016

Comments

Revised with 2014 restructuring to improve original wording (Volume of water used for

given level of agricultural production [m3/ha/crop cycle])

Partially achieved (75% of target)

Indicator 2: Difference between land productivity (t/ha) between head- and tail- end farmers (%)

Value n.a. n.a.

Date achieved January 2006 03/31/2014

Comments Dropped with 2014 restructuring in favor of Indicator 5 to assess equity of distribution

Indicator 3: Value of land (compared with non-project neighboring command area)

Value n.a. n.a.

Date achieved January 2006 03/31/2014

Comments Dropped with 2014 restructuring

Indicator 4: Irrigation Costs (EGP/1000 m3)

Value Pumping: EGP 50/1,000 m

3

Labor: EGP250/1,000 m3

n.a. 100 150

Date achieved January 2006 03/31/2014 March 2014 March 2016

Comments

Introduced with 2014 restructuring

Partially achieved (75% of target) as switching from diesel pumps to electrical units,

which would have generated reduction in pumping costs, was only partially carried out

Indicator 5: Ratio of Water Availability (in m3/hour) measured at head and tail (%)

Value 0 n.a. 75% 75%

Date achieved January 2006 03/31/2014 March 2014 March 2016

Comments Introduced with 2014 restructuring instead of Indicator 2 to assess equity of distribution

Achieved (100% of target)

Indicator 6: Area provided with improved irrigation and/or drainage services (ha)

Value 0 n.a.

193,750

(490,000

feddan)

193,750

(490,000 feddan)

Date achieved 01/31/2006 03/31/2014 03/31/2014 03/31/2016

Comments Introduced with 2014 restructuring


iv

Indicator 7: Water Users provided with new/ improved irrigation and/or drainage services

(number)

Value 0 n.a. 360,612 476,662

Date achieved 01/31/2006 03/31/2014 03/31/2014 03/31/2016

Comments


Exceeded (132% of target)

Estimated percentage of female beneficiaries: 20 (same as target)

Indicator 8: Operational Water User Associations created and/or strengthened (number)

Value 0 2,000 1,530 1,162

Date achieved 01/31/2006 03/31/2014 03/31/2014 03/31/2016

Comments Elevated to PDO level with 2014 restructuring (previous Component 3, Indicator 1)


Indicator 9: Beneficiary farmers reporting improved access to adequate water and drainage

services (%)

Value n.a. n.a. 50% 91%

Date achieved 01/31/2006 03/31/2014 03/31/2014 03/31/2016

Comments

Revised and elevated to PDO level with 2014 restructuring (previous Component 4,

Indicator 1)


Indicator 10: Yield of main crops (rice, maize, wheat, cotton, berseem) (tons/feddan) increase (%)

Value 0 n.a. 20% 15%

Date achieved 01/31/2006 03/31/2014 03/31/2014 03/31/2016

Comments

Revised and elevated to PDO level with 2014 restructuring (previous Component 2,

Indicator 3)


Indicator 11: Direct Project Beneficiaries

Value 0 n.a. 1,000,000 2,262,900

Date achieved 01/31/2006 03/31/2014 03/31/2014 03/31/2016

Comments



Estimated 20% of female beneficiaries

(b) Intermediate Outcome Indicator(s) by Component

Indicator Baseline Value

Original Target Values

(from approval

documents)

Formally

Revised

Target

Values

Actual Value

Achieved at

Completion or

Target Years

Component 1:

Indicator 1 Quantity of water flowing in cross-regulators and intakes (m

3/s)

Value n.a. n.a.

Date achieved 04/29/2005 03/31/2014


Component 1:

Indicator 2 Quantity of water delivered to branch canals and mesqas

Value n.a. n.a.

v

Date achieved 04/29/2005 03/31/2014


Component 1:

Indicator 3 Adoption of continuous flow

Value n.a. n.a.

Date achieved 04/29/2005 03/31/2014


Component 1:

Indicator 4 Area where mesqas improvement is completed (feddan)

Value 0 n.a. 85,000 feddan 85,347 feddan

Date achieved 04/29/2005 03/31/2014 03/31/2014 03/31/2016



Component 1:

Indicator 5 Area where new subsurface drainage systems are implemented (feddan)

Value 0 n.a. 4,000 n.a.

Date achieved 04/29/2005 03/31/2014 03/31/2014 03/31/2016


Not informed

Component 1:

Indicator 6 Area where subsurface drainage systems are rehabilitated (feddan)

Value 0 n.a. 118,760 92,085 feddan

Date achieved 04/29/2005 03/31/2014 03/31/2014 03/31/2016



Component 2:

Indicator 7

Quantity of water used by farmers trained under the project one crop cycle after

training completed (m3/ha/crop cycle)

Value n.a. n.a.

Date achieved 04/29/2005 03/31/2014


Component 2:

Indicator 8 Value of production per m

3 of water used

Value n.a. n.a.

Date achieved 04/29/2005 03/31/2014


Component 2:

Indicator 9 Yield of main crop (wheat, cotton, rice, barseem)

Value n.a. n.a.

Date achieved 04/29/2005 03/31/2014

Comments Revised and elevated to PDO level with 2014 restructuring (Indicator 3)

Component 2:

Indicator 10 Farmers trained on irrigation, water saving and drainage techniques (number)

Value 0 n.a. 10,000

Date achieved 04/29/2005 03/31/2014

Comments Revised with 2014 restructuring to improve original wording (Share of eligible farmers

vi

who have received training [%])

Component 2:

Indicator 11 Area where marwa improvement is completed (feddan)

Value 0 n.a. 30,000 feddan 24,000 feddan

Date achieved April 2005 March 2014 March 2016

Comments Added with 2014 restructuring


Component 2:

Indicator 12 Area where land leveling was introduced (feddan)

Value 0 10,000 feddan 10,000 feddan 7,000 feddan

Date achieved 04/29/2005 03/31/2014 03/31/2014 03/31/2016

Comments

Added with 2014 restructuring


After demonstrations on land leveling, farmers were convinced and land leveling

became part of their land preparation activities, and thus not computed on the project

Component 3:

Indicator 13 Number of WUAs legally established

Value 0 2,000 1,530 1,162

Date achieved 04/29/2005 03/31/2014 03/31/2014 03/31/2016

Comments Elevated to PDO level with 2014 restructuring (Indicator 8)


Component 3:

Indicator 14 Number of WUAs and BCWUAs functioning one year after establishment

Value 0 n.a.

Date achieved 04/29/2005 03/31/2014


Component 3:

Indicator 15 Cost recovery collections

Value n.a. n.a.

Date achieved 04/29/2005 03/31/2014


Component 3:

Indicator 16 Equity = difference between head and tail yield for main crops

Value n.a. n.a.

Date achieved 04/29/2005 03/31/2014

Comments Dropped with 2014 restructuring in favor of PDO Indicator 5 to assess equity of

distribution

Component 3:

Indicator 17 Number of established BCWUAs

Value 0 80 162 308

Date achieved 04/29/2005 03/31/2014 March 2014 March 2016



Component 3:

Indicator 18 Number of established District level Water Boards (WBs)

Value 0 11 11 9

vii

Date achieved 04/29/2005 03/31/2014 03/31/2014 03/31/2016



Component 3:

Indicator 19 Number of established IWMDs

Value 0 11 22 22

Date achieved 04/29/2005 03/31/2014 03/31/2014 03/31/2016



Component 4:

Indicator 20 Share of farmers in project area satisfied with administration of irrigation systems

Value n.a. n.a.

Date achieved 04/29/2005 03/31/2014

Comments Revised and elevated to PDO level with 2014 restructuring (Indicator 9)

Component 4:

Indicator 21 Implementation pace (actual vs planned disbursements)

Value 0 n.a.

Date achieved 04/29/2005 03/31/2014


Component 5:

Indicator 22

Number of environmental (performance-based) monitoring/benchmarking systems

in place and functioning

Value 0 n.a.

Date achieved 04/29/2005 03/31/2014


Component 5:

Indicator 23

People in project area reached by awareness activities related to proper sewage

and solid waste disposal and water quality impacts

Value 0 n.a. 50,000 59,400

Date achieved 04/29/2005 03/31/2014 03/31/2014 03/31/2016

Comments

Wording changes with 2014 restructuring (original wording: Public awareness of quality

of water in irrigation canals)


Component 5:

Indicator 24 Solid waste collected and safety disposed (ton)

Value 0 n.a. 10 n.a.

Date achieved 04/29/2005 03/31/2014 03/31/2014 03/31/2016

Comments

Wording changed with 2014 restructuring (original wording: Tons of solid wastes

collected and safety disposed to (pilot) landfills)

Not informed

viii

G. Ratings of Project Performance in ISRs

No. Date ISR

Archived DO IP

Actual Disbursements

(US$, millions)

1 09/08/2005 Satisfactory Satisfactory 0.00




5 04/02/2007 Satisfactory Moderately Unsatisfactory 0.60

6 10/05/2007 Satisfactory Moderately Satisfactory 3.60

7 06/02/2008 Satisfactory Moderately Satisfactory 5.69

8 12/31/2008 Satisfactory Moderately Unsatisfactory 7.68

9 06/11/2009 Moderately Satisfactory Moderately Unsatisfactory 8.43

10 10/06/2009 Moderately Satisfactory Moderately Unsatisfactory 10.66

11 06/07/2010 Moderately Satisfactory Moderately Satisfactory 20.37


13 01/21/2012 Moderately Unsatisfactory Moderately Unsatisfactory 40.21

14 12/19/2012 Moderately Unsatisfactory Moderately Unsatisfactory 44.16








H. Restructuring (if any)

Restructuring

Date(s)

Board

Approved PDO

Change

ISR Ratings at

Restructuring

Amount

Disbursed at

Restructuring

in US$, millions

Reason for Restructuring & Key

Changes Made DO IP

10/14/2012 MU MU 43.4

Changes were made to increase the

percentage of expenditures to be

financed under the loan from 70% to

90%, reallocate the loan proceeds

among categories of expenditures,

and as amend Schedule 4, Section

III-I of the Loan Agreement based on

the revised procurement plan, to

identify the number of contracts

subject to the World Bank’s prior

review.

3/20/2014 MS MS 65.99

Extend the loan closing date and

reallocate loan proceeds among

different categories of expenditures.

ix

Improvement of the Results

Framework.

01/17/2016 MS MS 101.96

Reallocation of the loan proceeds

among different categories of

expenditures to help finance

procurement of emergency pumps

and spare parts for large pumping

stations to ensure sustainability of

investments under the project.

I. Disbursement Profile

1

1. Project Context, Development Objectives and Design

1.1 Context at Appraisal

1. Egypt has been described, since time immemorial, as the ‘gift of the river Nile’, and so it

is not surprising that management of water resources has been central to all aspects of national

strategy. Its reliance on the Nile is reflected in the fact that 90 percent of the population live on 5

percent of the land area around the stem of the Nile River and the Delta. The Nile waters are

shared by nine other upper riparian nations, all with growing water demands. The country faced

the strategic challenge of improving the productivity and sustainability of water use, rather than

augmenting water supply. Population growth had exacerbated the problem: at project appraisal,

Egypt had a per capita availability of 950 cubic meters (m3) per year of renewable freshwater

resources, which was lower than the regional average of 1,200 m3 per year. This was projected to

decline to 650 m3 per year by 2017.

2. At appraisal, improving the productivity and sustainability of water use was expected to

be derived from reducing losses on the mesqa and marwa (farm) level by piping open canals

(both at the mesqas and marwas), diminishing surface runoff through land leveling, and reducing

deep percolation through adjustments in the irrigation scheduling. In addition to water savings,

increases in productivity and reductions in irrigation costs were expected (electric versus diesel

fuel for pumping and labor required), as well as 2 to 3 percent of additional cropping area

recovered through the filling of the old open mesqas and marwas with the new proposed piped

system.

3. Increasing the economic return per unit volume of water also created both on-farm and

off-farm income and employment for the rural poor and non-poor alike. At appraisal, 70 percent

of the poor lived in rural areas, with some 38 percent on landholdings of less than 1 feddan.

Furthermore, because the annual Government of Egypt (GOE) expenditures on water services

absorbed up to 10 percent of total public expenditures, rationalizing and reforming water

management was central in any strategy aimed at accelerating the country’s economic growth.

The Ministry of Water Resources and Irrigation (MWRI) had taken the lead in launching this

reform agenda, an Integrated Water Resources Management Action Plan was being finalized

during project preparation.

4. At appraisal, a full understanding of the performance and functioning of existing land

drainage systems was expected to be achieved during mesqa-level design and implementation.

The population had reported that water tables in the project area had risen and rendered the

discharge capacity of drainage systems less effective. It was assumed that the anticipated effect

of improved mesqa design would lead to a decrease in seepage losses and hence to lower water

tables and their stabilization. However, the benefits from water table stabilization, along with the

elimination of waterlogging from the life of the beneficiaries, were barely appreciated.

5. Rationale for World Bank involvement. The World Bank’s strategy in Egypt placed

emphasis on areas where the GOE commitment was strong, where the GOE-World Bank

partnership had a long track record, and where donor financing catalyzed long-term reforms. The

proposed project satisfied all those requirements. In particular, the project built on the World

Bank’s long and successful partnership with the MWRI in the irrigation and drainage sector in

2

Egypt and the long-term collaboration with the German Development Bank (Kreditaustalt fur

Wiederaufbau, KfW) and the Netherlands Development Cooperation (NDC) in promoting a

common donor vision for institutional change. The involvement of the two donors with their

areas of comparative advantage supported a long-term reform process with a blend of technical

assistance (TA) and investments.

1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved)

6. The objective of the project is to assist the borrower in improving the management of

irrigation and drainage in the project area to increase the efficiency of irrigated agriculture water

use and services. This is from the Loan Agreement and is essentially the same as in the Project

Appraisal Document (PAD) where ‘overall project objective’ is used instead of ‘objective of the

project’.

7. The PAD, on page 3, presented the following selected key indicators: (a) water use

volumes, system efficiencies, and water distribution equities; (b) crop yields and farmer incomes;

(c) Branch Canal Water Boards (BCWBs) and mesqa water user associations (WUAs)

established, with operation and maintenance (O&M) responsibilities fully transferred to mesqa

WUAs and jointly assumed by BCWBs and the MWRI district-level agencies; and (d) all

involved institutions/agencies actively coordinating and interacting for project planning,

implementation, and management.1

1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and

reasons/justification

8. The original project objectives remained unchanged throughout project implementation.

However, three core sector indicators were added:

Area provided with improved irrigation and drainage services

Water users provided with new/improved irrigation and drainage services (male,

female)

Operational WUAs created and/or strengthened

9. The value of land (compared with non-project neighboring command area) indicator was

dropped because a number of causes, such as encroachment of urban areas into agricultural land

that was not project dependent, were influencing the value of the land.2

1 The list of key indicators was elaborated in annex 3 of the PAD, however, mainly at the component level. Many of

the broad concepts in page 3 of the PAD, such as ‘systems efficiencies’, had not been elaborated in annex 3.

Consequently, when it came to identifying the original key indicators, particularly in creating the Results

Framework, the ICR was guided more by the 2014 Restructuring Paper which had just four PDO indicators, one of

which (value of land) was dropped at that stage. In addition, when the 2014 Restructuring Paper had introduced an

indicator as a PDO indicator and the PAD had included that indicator but not as a PDO indicator, the ICR included

them in the Results Framework as if they had been PDO indicators all along. 2 The units of measurement for two indicators were also changed. The unit for water productivity indicator was

changed from m3/ha crop cycle to water productivity increase (in percentage) for main crops, because the new unit

reflected better the PDO objective of ‘efficiency of irrigated agriculture water use’, for example, when higher

value/higher water use crops were introduced by the farmer. For the same reason, the unit to measure equity within a

3

1.4 Main Beneficiaries

10. The direct beneficiaries are the farmers and their families supplied with improved

irrigation and drainage services who now receive more reliable and regular water supplies

following the interventions made under the project. An estimated 476,662 water users have been

provided with new/improved irrigation and drainage services by the project, of which about 20

percent are females. The project is estimated to have a total of 2,262,900 direct beneficiaries

(about 5 direct beneficiaries per water user).

11. Alexandria City residents are the indirect beneficiaries of the project-financed

improvements of the Mahmoudia main canal. Dredging of the canal and rehabilitation of water

control structures improved the hydraulic functioning and capacity of the canal, benefiting

drinking water supplies (improved safety and reliability) to a population approaching 5 million.

The city gets about 70 percent of its water supply from the Mahmoudia canal, drawing annually

about 912 million m3 for drinking water and 273 million m

3 for industrial usage.

12. Other beneficiaries include populations living adjacent to the Mahmoudia and Meet

Yazed main canals. Canal stabilization works as well as raising the banks in some sections

resulted in considerable improvement in the conditions of the roads along the canals. Before the

project, seepage through the embankments was making the roads quite unstable and they were

collapsing regularly into the canals. Rehabilitation of various structures, including bridges and

regulators, was also beneficial to the population and to the industries that use these roads.

1.5 Original Components (as approved)

13. The project had five components:

(a) Improved and Integrated Water Management (US$224.9 million). This

component covered the implementation of irrigation and drainage rehabilitation,

improvement and modernization works and programs at all levels of the selected

command areas. Subcomponents included (i) main canal system improvements; (ii)

branch canal (secondary) and mesqa (tertiary) system improvements, including

electrification for pumping stations wherever feasible; (iii) marwa (quaternary) and

farm-level irrigation system improvements; (iv) open and subsurface drainage (SSD)

network improvements; (v) main pumping station improvements; (vi) tube well

irrigation and groundwater monitoring improvements; and (vii) engineering studies,

designs, construction supervision, and O&M set-up.

(b) Improved On-Farm Water Management (US$4.6 million). This component

covered (i) regional water and land management adaptive research programs; (ii)

extensive on-farm water control and irrigated agriculture practice demonstrations;

and (iii) irrigation advisory and production support services strengthening.

(c) Institutional Development and Capacity Building (US$14.3 million). A major

focus of this component was the proper establishment, expansion, and scaling-up of

mesqa was changed from ‘difference between land productivity (T/ha) between head- and tail-end farmers’ to ‘ratio

of water availability measured at head and tail end’.

4

water user organization functions at the levels of tertiary and secondary system

irrigation and drainage hydraulic units throughout the selected command areas.

Defined subcomponents covered (i) establishment of secondary system irrigation

and drainage BCWBs and ensuring their voice in water management decision

making at district and command area levels through the formation of federated water

boards at the district level; (ii) establishment of mesqa WUAs and ensuring their

proper representation within the BCWBs; (iii) establishment and mainstreaming of

Integrated Water Management Districts (IWMDs), together with establishment of

suitable joint or integrated irrigation/drainage command area management systems;

(iv) execution of cadastral and water users registration surveys and preparation of

corresponding databases; and (v) preparation of updated digital and hard copy maps

based on IKONOS satellite images and national mapping grids.

(d) Project Management, Coordination, and Integration (US$11.0 million). This

component was to support the management and coordination entities, functions, and

activities needed for effective planning, implementation, and eventual

commissioning of irrigation and drainage improvements on the basis of full

command areas. It also promoted and facilitated, as appropriate, the integration of

the various functions and contributions, both within the MWRI and between the

MWRI and other involved and concerned ministries. Subcomponents covered (i)

establishment and operational support for an integrated Project Management Unit

(PMU), reporting to the Project Steering Committee and located within the MWRI;

(ii) establishment and operational support for Regional Coordination Units (RCUs)

and regional implementation teams attached to the PMU, one at each of the two

project command area locations; (iii) setup and execution of monitoring and

evaluation (M&E) arrangements and programs to assess project impacts and

performance; and (iv) assistance with the formulation and facilitation, as needed, of

liaisons and linkages at and between central and local levels that will advance the

integration of improvement planning, implementation, and management, including

for execution of preparatory studies for the potential Integrated Irrigation

Improvement and Management Project (IIIMP) Phase II.

(e) Environmental Mainstreaming (US$5.0 million). This component focused on

carrying out of an environmental management program, consisting of the following:

(a) the provision of goods, training, and consultants’ services for (i) conducting

public awareness and information disclosure campaigns; (ii) carrying out

performance-based monitoring activities; (iii) conducting environmental studies and

management plans related to rural sewage, solid waste, and pest management within

the project area; and (iv) strengthening the institutional capacity of water user

organizations; and (b) the carrying out of works and provision of goods required for

rural sewage and solid waste management (SWM) pilots, all to support

environmental mitigation measures and to empower water boards to ensure a

sustainable management of water resources.

1.6 Revised Components

14. Components were not revised during project implementation.

5

1.7 Other significant changes

15. According to the PAD, the project duration (see page 35) was expected to be seven years

with the closing date set for March 31, 2014. However, because of the political unrest in Egypt

(January 2011 and June 2013), which affected the implementation progress of the project in

various ways, the project closing date was extended to March 31, 2016.

16. The project was restructured three times as follows: (a)Schedule 1 (withdrawal of the

proceeds of the loan) was amended and all other (National Competitive Bidding) contracts to be

subject to post-review by the World Bank on October 14, 2012; (b) extension of the project to

March 2016 and reallocation of funds among categories and introduction of a service category on

March 31, 2014, with additional changes related to the scope category 6 (‘Services’) to include

‘Consultant services, training and workshops, and operating costs’ on July 7, 2014. Improvement

of the Results Framework with changes in the results indicators were made in this restructuring;

and (c) further changes related to the scope of the categories on January 17, 2016.

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry

17. Project preparation. Project design integrated the experience and lessons learned under

the Irrigation Improvement Project (IIP), the National Drainage Program, and other ongoing

projects. Inequity of water supplies along the mesqas (tertiary canals) had been identified as a

key problem: head end users were favored at the expense of tail-enders, who more often

experienced delayed crop establishment, reduced crop development and yields, and crop failure.

Farmers generally suffered because of limited water availability, as water at the branch canals

(secondary canal) was often insufficient to feed all mesqas. When water was available, farmers

had to bear high irrigation costs by pumping water from the mesqa canals using individual diesel

pumps. Finally, inefficient drainage would result, among other things, in periodic rise of the

water table, which would make working in the field particularly difficult in addition to

negatively impacting yield.

18. Design. Under the IIP, a pilot (covering 6,500 feddans) addressed the above issues and

was the basis of the project design of the IIIMP. The pilot had focused on improving the

efficiency and equitable distribution of water at the mesqa level, and found that the complete

system from the main and branch canals had to function efficiently to deliver water to the mesqa

outlets. Consequently, the IIIMP design included the structural improvements of the main

(primary) and branch (secondary) canals to improve the hydraulic capacity of the system and

deliver more water to the mesqas (tertiary) canals. Improved irrigation and drainage services

were expected to translate in increase in yield and water productivity. Improvement of the

drainage system financed under the IIIMP was expected to prevent waterlogging, with the

additional benefit of making water available for downstream users. Construction of a pumping

station for each mesqa (tertiary canals) and its electrification were expected to reduce pumping

costs compared with use of individual diesel pumps.

19. In addition, the IIIMP design addressed institutional arrangements both for individual

mesqa operation through the WUA and the changes and strengthening of all the relevant

6

institutions upon which the mesqa-level WUAs depended. Lastly, participation of multiple

donors/institutions, for example, the World Bank, NDC, KfW, Food and Agriculture

Organization of the United Nations, and U.S. Agency for International Development, during

appraisal and/or implementation was important for the borrower in addressing the sectoral issues

concertedly.

20. Alignment with the World Bank Group Country Partnership Framework (CPF). With the above design, the project was well aligned with the World Bank’s Country Assistance

Strategy (CAS), which emphasized environmental conservation, sustainability, and poverty

alleviation by improving the irrigation infrastructure to address agricultural productivity. The

CPF, covering 2015–2019, specifically has as its objective 2.4: Enhanced access to improved

agriculture and irrigation services. The project was also consistent with the World Bank’s 2003

Water Resources Sector Strategy. Lastly, the project built on the World Bank’s long and

successful partnership with the MWRI in the irrigation and drainage sector in Egypt.

21. Risk assessment. A number of critical risks were identified in the PAD, with proposed

mitigation measures. The major risks identified at appraisal were two: (a) the limited

implementation capacity of domestic contractors, which could reduce the area improved or could

result in delay and (b) the delay in design of improvement works and procurement processing.

These risks were to be minimized by (a) provisioning TA and training of contractors and staff

and (b) advance actions on procurement and design work using Policy and Human Resources

Development grants funds. In retrospect, both risks were underestimated since, in spite of the

mitigating measures adopted, they both caused delays. Similarly, provision of electrical lines for

mesqa pump stations was considered a moderate risk. However, the difficulties and subsequent

failure to deliver power to the individual mesqa pumping stations within the implementation

period became the key reason for not achieving the target number of operational WUAs.3

22. Quality at Entry. Some other risks were not identified in the PAD and had to be

addressed later. For example, relying upon the estimates and the pilot, but without detailed

surveys, feasibility studies, and engineering designs, the project had underestimated costs (by

about 15 percent). These lack of detailed studies and engineering design were rectified without

affecting the outcome.

2.2 Implementation

23. Initial progress. Initial progress on the project was slow. As indicated above, the lack of

detailed engineering designs on large civil works (that was rectified after the project was

effective) was one of the reasons. However, the most important reason was the slow uptake of

the mesqa improvement. Mesqa improvement works formed the largest component of the project,

absorbing approximately 50 percent of the infrastructure budget. The designs for the mesqas and

particularly the pumps and pump houses were critically reviewed during the implementation to

reduce the overall costs of the mesqa-level subproject since these costs would be recovered from

the individual farmers. This detailed design work caused delays. Delays also arose from

3 Once it was realized that electrification was going to be slow, because it was within the purview of institutions

other than the MWRI, beneficiaries were willing to accept, as an interim measure, diesel units which decreased

operational costs for the beneficiaries to some extent. This improved the number of fully operational WUAs but it

still fell short of the target.

7

acceptance of the design by a large majority (75 percent) of the farmers at a particular mesqa.

Without farmers’ approval of proposed works, the implementing agency and the project could

not proceed with their construction.

24. Political upheavals. The political upheavals of 2011–2013 were also one of the key

factors affecting project implementation. The Egyptian revolution of 2011 took place across all

of Egypt in January and the country entered a period of political uncertainty that remained high

even after the presidential elections in early 2012, as Islamists clashed with non-Islamists over

the direction of policy. In mid-2013, the army removed the president and soon after, declared a

state of emergency and nighttime curfews. These three years severely affected project

implementation because, among other things, the political uncertainty and the accompanying

macroeconomic problems made the contractors very reluctant to proceed with works or bid for

new contracts. The curfew also curtailed working hours because people had to complete all

activities outside their house, including going to the stores for example, before nighttime.

25. PMU. On the positive side, the implementation was facilitated by a straightforward

organizational design for project implementation. The project PMU was established in the

MWRI offices in Cairo and was responsible for the integrated planning, financial management

(FM) and budget control, procurement of goods and services, monitoring and coordination of

project activities, and overall technical and progress reporting. The PMU had a coordinating,

monitoring, evaluation, and problem solving role, while actual implementation of the structural

works was delegated to the line departments within the MWRI. TA was provided by national and

international consultants.

26. Procurement arrangements. The PMU was responsible for the procurement process,

and after establishing acceptable procedures in discussions with the World Bank, there appeared

to be few problems in the preparation, bidding, and contract award process in the latter stages of

the project. Physical implementation of project works was designated to the technical units

within the ministry who were then responsible for all activities related to the satisfactory

completion of the project works. At the regional level, the RCUs were coordinating project

implementation for Mit Yazid and Mahmoudia. These RCUs actually helped bring together

irrigation and drainage sectors at the local level, which facilitated implementation of the project

on the ground.

2.3 Monitoring and Evaluation (M&E) Design, Implementation, and Utilization

27. M&E design. The original M&E framework in the PAD 2005 was based on the overall

project rationale and design and its underlying assumptions. In general, the framework was

appropriate but key indicators had several shortcomings. First, the key indicators did not match

the broad concepts, such as systems efficiencies, in the main text of the PAD with what was

envisaged to be measured as shown in the annex. For some indicators, the design did not

appreciate that a particular indicator, such as the value of land, could be influenced substantially

by factors extraneous to the project. At least for two cases, the units of measurements chosen did

not suit the PDO objective of ‘efficiency of irrigated agriculture water use’. Lastly, specifications

of (intermediate and end) targets were not provided in the PAD and had to be developed later.

Essentially, most of the design shortcomings were indeed rectified during implementation (see

subsection on M&E utilization below).

8

28. M&E implementation. During the period of project effectiveness, the project had a

strong progress monitoring system. The PMU relied on the regular provision of progress

information from various implementing agencies involved, such as Irrigation Improvement

Sector (IIS), Irrigation (IS), HEPS, Egyptian Public Authority for Drainage Projects (EPADP),

and the Ministry of Agriculture and Land Reclamation (MALR). Earlier plans to facilitate and

streamline progress monitoring by activating the ‘procurement’ and ‘project planning’ modules

of the Lawson M3 software package, which was purchased in January 2007, was abandoned

because the activated part of the software package covered only financial monitoring. Instead

linked Excel sheets were used to generate monthly tabulated or graphic physical progress of the

project. Based on this, monthly progress reports were prepared by the PMU and were used to

adjust their overall planning of activities, adjust the financial forecast, and to take action with

regard to poor performance of contractors, and so on. For financial monitoring, the project used

the Lawson M3 software package, which allowed for entering the financial transactions into the

system on a monthly basis. As a result, the PMU had a reliable filing system with easy access to

the financial files and transactions. Financial monitoring reports were easily generated by the

software, providing instant answers to queries.

29. M&E utilization. During the midterm review (MTR), pursuit of continuous flow4 in

mesqa-level designs was quite correctly dropped. Shortly after the MTR, a revised framework

was prepared combining existing elements and main targets defined in the arrangements for

results monitoring with new indicators. It corrected some, but not all, of the problems in M&E

design. For example, the indicators still failed to consider that most irrigation and drainage

benefits come only after a number of years of improved irrigation/drainage services when

farmers adjust their practices (and yield/productivity gains ensue). On the positive side, the new

indicators were indeed made simpler and easy to measure, and more meaningful to the borrower

and the World Bank. The changes included, adding to the original list of PDOs, indicators such

as total area with improved irrigation and drainage services, number of beneficiaries, and number

of established WUAs.

2.4 Safeguard and Fiduciary Compliance

30. Overall, the project activities complied with all applicable World Bank policies. The

project was classified as category B according to OP 4.01, as there were no associated significant,

sensitive, diverse, unprecedented, or irreversible impacts. The triggered Safeguards Policies were

OP 4.01 (Environmental Assessment) and OP 4.12 (Involuntary Resettlement) for the possible

resettlement and economic losses attributed to the various planned activities the project.

4 Continuous flow means a variable but nonstop supply of water to the heads of the branch canals. In contrast to

rotational flow, the same amount of water that is normally provided during the ‘ON’ period of the rotation is

provided, but spread out over the full period. Consequently, daily discharges under continuous flow are smaller than

those during ‘ON’ periods of a rotation. However, when the project applied continuous flow on a number of branch

canals, it found that changing from rotational flow to continuous flow did not have a significant effect on water

productivity. In addition, a key requisite for continuous flow in the branch canals is the ability to measure and

regulate flows into the branch canals. The regulation of flows into branch canals, particularly during periods of low

flow or high demand, has to be equitable and transparent to the farmers. Such a limitation made continuous flow

infeasible for many branch canals.

9

31. Environmental safeguards. The client prepared an Environmental Assessment, which

concluded that the net environmental impacts of the project are positive and that the direct

negative impacts are generally temporary and minor. An Environmental Assessment and an

Environmental Management Plan has been prepared to address both direct environmental

impacts and external factors. The environmental mainstreaming component demonstrated how

water quality could be improved through control of urban SWM and sewage treatment. Under

this component, a feasibility study was undertaken for the preparation of the Integrated

Sanitation and Sewerage Infrastructure Project in the same command areas, where rural

sanitation investments were implemented, while other measures, including SWM and instream

wetlands, have been transferred to the ongoing Enhanced Water Resources Management

(EWRMP) GEF project. On the other hand, relatively higher-risk contracts, such as siphons5 and

canal bed dredging,6 were subject to site-specific Environmental and Social Impact Assessments

/Environmental and Social Management Plans (ESMPs). The PMU has kept records showing the

monitoring measures taken during implementation of the ESMPs.

32. Resettlement Action Plan (RAP). In light of the triggered OP 4.12 in March 2005, a

provisional RAP was completed before project approval. During implementation, there was a

scale-back and the need for land was significantly reduced. An update on the ESMP, including a

Resettlement Policy Framework (RPF), was prepared and disclosed in 2010. The RPF was

determined as the most appropriate choice of instrument because (a) the exact command areas

for civil works were unknown and (b) the scope of the project and the magnitude of impacts

were uncertain. Although the RPF indicated a possibility for preparing site-specific RAPs, no

more RAPs were prepared during the course of the project. During implementation, the

contractors worked carefully, selecting the timing of the civil works to minimize crop losses.

After the works were completed, farmers had full use of their land without any restrictions or

impacts on the land value (in fact, land value increased).

33. Compensation. During project implementation, lack of crop compensation for

electrification contracts was identified, a joint World Bank/PMU team proactively conducted a

series of field visits to the World Bank–funded investments in Kafr El Shiekh Governorate,

between April and May 2016 to identify the project affected persons, assess crop damages, and

pay compensation. Payment of all project affected persons was swiftly and successfully

completed by end of May 2016. During this process, nonpayment for crop damages associated

with SSD in Behira, because of lack of funds, was also identified, and extensive fieldwork was

carried out to identify farmers and provide fair compensation.

34. FM. FM under the project included an externally hired FM consultant, in addition to

three seconded accountants from the MWRI Finance Department. All of the employees in charge

possessed the required skills and expertise to carry out their responsibilities. The project

consistently maintained sound manual and automated accounting records. The quarterly report

reviewed Interim Financial Reports and the annual audited Financial Statements were

consistently received on time and were of acceptable quality.

5 A site-specific Environmental and Social Impact Assessment/ESMP was prepared for the larger siphon with risk of

old siphon failing, and it was agreed that the ESMP would be generalized to other siphons. 6 Samples from the Mahmoudia canal sediments were analyzed to determine the safe method of handling/disposal.

10

35. Procurement. All procurement was carried out by the PMU. A total of 156 civil works

contracts were awarded following standard World Bank procurement guidelines. In addition, 38

contracts were awarded for the supply of goods and services, the largest contract being for the

supply of spare parts for drainage pumping units. There appeared to be minimal delays in the

actual procurement process. Delays appear to be in identifying works and preparing detailed

designs and technical issues for bid documents.

2.5 Post-completion Operation/Next Phase

36. Success of the post-completion operation/next phase will depend largely on the WUAs.

As each mesqa was fully completed and operational with electric power supply and electric

pumping units, and the mesqa handed over to the WUA, the beneficiaries took full responsibility

for O&M. This allowed the project to move steadily and smoothly into the operational phase,

one operational WUA at a time. The involvement of the farmers at all stages of the development

of the mesqa contracts including the design layout and location has ensured that the community

has a strong sense of ownership of the system, and this should also ensure its overall

sustainability. In some cases, the farmers were prepared to take over their systems with only

diesel units installed. To redress their situation, since January 2016, the MWRI has allocated

EGP 162 million from the counterpart funding to complete all ongoing contracts. Lastly, the

MWRI is expected to maintain the availability of water through the main and branch canals.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation

37. Relevance of objectives. The relevance of the project objective is rated High.

38. The above rating is based on three observations. First, the project explicitly included

drainage in the objective and addressed issues of rising water table, for example. This made the

project objective highly relevant not only in terms of agricultural production/poverty alleviation

but also in terms of general well-being that include prevention of contamination from

waterlogging/flooding that used to happen for the beneficiaries regularly7. Second, elements

other than drainage in the project objective, such as management of irrigation, continue to be

very relevant in the country context. Of course, even without the project the beneficiaries would

be using irrigation but its management, with distinct roles for the public sector and the

beneficiaries, needed to be addressed in the context of diminishing water supply and climate

change. Furthermore, given the country condition, it is also well understood that because the

main livelihood of the population in the Nile delta is agriculture, improvements in the link

between irrigation and agriculture such as improvements in the reliability and equity of water

supply are very relevant. Contribution to employment and reduction in rural poverty are elements

7 In agricultural land drainage, the purpose of water table control is to establish a depth of the water table that no

longer interferes negatively with the necessary farm operations and crop yields. However, shallow water tables can

increase the risk of flooding and affect the quality of drinking water with health consequences for the communities.

The African Development Bank (AfDB) recently announced a grant agreement to complement the World Bank’s

support to the National Drainage Programme, which aims at optimizing the benefits of irrigation by draining excess

irrigation water from agricultural land to reduce waterlogging and consequent soil salinity, in addition to making

more land available for cultivation. This is expected to result in higher crop yields in the target areas, higher farm

incomes, and increased food security and poverty reduction in general.

11

of this relevance. The project objective specifically addressed ‘increase the efficiency8 of

irrigated agriculture water use and services’, which made it quite consistent with the World Bank

Group CPF (FY2015–19) for Egypt Objective 2.4: Enhanced access to improved agriculture and

irrigation services. Egypt’s 2009 Sustainable Agricultural Development Strategy Towards 2030,

on page 21, puts its number one objective as enhancing water use efficiency in irrigated

agriculture and which the project’s PDO addressed.

39. Relevance of design/implementation. The relevance of the project

design/implementation objective is rated Substantial.

40. The project design/implementation used essentially a two-pronged approach where in

terms of organization, the design/implementation focused on the development of the WUAs at

the tertiary level (that is, one level above the individual farmer) with some development of other

institutions, such as water boards and so on, above the WUAs. To have cohesion at the WUAs,

the design/implementation focused on the equity aspect (for example, availability of water at the

head and tail end) as well as on costs (for example, cost of electricity/gasoline). The design to

address the equity aspect locally while addressing broad water issues through the state’s

institutions, the MWRI in particular, was powerful. It did not have the usual trade-offs of

winners and losers or efficiency and equity. Similarly, the benefit of having 40–50 diesel pumps

replaced by a single electricity powered unit not only brought down costs but also had a

substantial positive effect in terms of greenhouse gases.

41. The other prong focused on the investments that went into rehabilitation and

improvement of the irrigation and drainage facilities in the project area at various levels starting

at the main canals, moving through branch canals, into tertiary (mesqa) and quaternary

(marwa/farm level) systems. Combining the two prongs, the design/implementation had half the

investment for the tertiary systems matching the development of WUAs, where the MWRI came

with support that coordinated its various directorates.

42. These investments aimed to increase the efficiency of water usage through improvement

in the management of both irrigation and drainage and led to better water distribution,

particularly for tail end users, which was reflected in the PDO. The components were well

aligned with the PDO. In general, the Results Framework was appropriate but there were minor

shortcomings in indicators that were rectified during implementation. In terms of process, the

project empowered water users for participation in the planning and implementation and reduced

the fragmentation that existed within the MWRI. Lastly, with water users assuming greater

responsibility for O&M through their WUAs, the project built upon indications that users are

willing to share the costs, if services are reliable. Such sharing of costs/responsibility is expected

to lead to greater sustainability of the infrastructure modernization and improved management of

the irrigation and drainage systems.

3.2 Achievement of Project Development Objectives

Rating: Substantial

8 ‘Efficiency’ in the PDO goes beyond the inputs and outputs and carries a sense of being able to accomplish

something (for example, equitable distribution of water at the mesqa level) with the least waste of time and effort.

12

43. The project improved the management of irrigation and drainage by the borrower’s

MWRI in the project area by (a) mainstreaming a program that encouraged user participation at

the tertiary (mesqa) and secondary (branch canal) levels and (b) leveraging user preferences at

the mesqa level to integrate various parts of the MWRI to coordinate their programs on irrigation,

drainage, and pump-related engineering services. The project also attempted to coordinate

beyond the MWRI to include the services of the MALR, Ministry of State for Environmental

Affairs, and other ministries, but with modest success, maybe because of the challenge of such

inter-ministerial coordination.

44. The results in terms of increase in efficiency of irrigated agriculture water use (as per the

PDO) are most visible at the mesqa level, with the availability of water at the head and tail end at

75 percent level and water table stabilization, and to some extent, also at the marwa level in

terms of water productivity increases and substantial cost reductions. The water productivity

result is expected to reach their target as farmers adjust their practices to reflect the reliability of

water supply. These improvements materialized from the project:

Main canals. A total of 27 contracts were completed, of which 13 on Mahmoudia

main canal and 14 on Meet Yazid and Zawia main canals, that included, among

other things, rehabilitation of major structures including locks, cross-regulators, and

bridges, installation of bored and sheet pile bank protection works, reprofiling and

stabilizing embankments with stone pitching and internal drains, construction of

reinforced concrete sections to replace unstable sections of the main canal, seepage

control works, and the replacement of syphons.

Branch canals. A total of 43 branch canals were rehabilitated with upgrading of

445km of canals with 38 completed contracts with works including bank

stabilization, new road and foot bridges, repair or replacement of cross-regulators,

improved mesqa offtakes, construction of boxed culverts through residential areas,

and construction of some lined sections. Contracts were also awarded to install

ultrasonic flow measurement systems in the main and branch canals.

Rehabilitation and new construction of SSD. A total of 97,982 feddans were

covered under contract, of which 92,085 feddans were completed, with some new

construction, with 10 contracts.

Activities for mesqa WUAs and irrigation improvement. Preparation of designs

and tender documents for 85,347 feddans of mesqa improvement.

Marwa development covering 24,546 feddans (completed).

45. Similarly, some improvements in costs are expected as more mesqas are connected to

electric pumps. However, they may still have higher total costs (from higher labor costs) because

they are unwilling to invest in cost savings, for example, from a change in farming practice that

would be supported by the reliable water availability because of various reasons such as

unemployment of family members.

13

46. The increase in efficiency indicated above came from 476,662 water users, where

beneficiary farmers reporting improved access to water and drainage services was 91 percent

(almost double the target). The large coverage results also demonstrate in another way how the

project improved borrower’s management of irrigation and drainage in the project area.

47. Substantial achievement was also made in institutional development and on farm

management in the project area:

Three Integrated Water Resources and Irrigation General Directorates (IWRIGDs)

were established in Beheira, Gharbia, and Kafr El Sheikh.

A total of 22 IWMDs were established.

A total of 308 Branch Canal Water Users Associations (BCWUAs) were established.

Nine District Water Boards (DWBs) were established.

At the mesqa level, 1,162 WUAs were operationalized, which required a large

majority (75 percent) of the beneficiaries in the mesqa to agree to the proposed

design specific to that mesqa and agree to bear mesqa improvement costs as required

under the law.

The WUAs operationalization effort fell short of the target (1,530 WUAs), partly

because of problems with electrification. The shortcoming was partly redressed by

establishing 2,070 WUAs that exceeded considerably the target (also 1,530). These

were established but were not fully operational; WUAs continue to use individual

pumps and do not benefit from electricity-related operational cost reduction.

48. Lastly, the project assisted the borrower in improving the management of irrigation and

drainage organizationally by having other donors work together toward the same PDO. The

project was supported by two other agencies: KfW provided an initial loan of EUR 38,800,000

and in addition a grant of EUR 2 million for TA for consultancy services, and this was

subsequently increased by a further EUR 25 million; and the Netherlands Government Ministry

for development Cooperation provided a grant budget of EUR 14,900,000 which was allocated

specifically to the various components of the project and focused on training and awareness

programs. The Netherlands Grant was extended by three months, to compensate for the

suspension during the political unrest, and closed in early 2014. The KfW support has a closing

date of December 31, 2016.

3.3 Efficiency

Rating: Modest

49. The project efficiency suffered mainly from the higher cost of mesqa rehabilitation

compared with the appraisal estimate and from the two-year delay in implementation during the

political upheavals. During project appraisal, the target cost for mesqa rehabilitation was set at

US$1,200 per feddan, with an upper limit of US$1,450 per feddan. With 85,000 feddans

improved for an overall cost of US$112.24 million, including the branch canals, the cost for

14

improvement came to US$1,320 per feddan, 10 percent above the appraisal estimate. Similarly,

for SSD, the cost was estimated at US$450 per feddan for 124,000 feddans. Instead, the project

completed 94,715 feddans at a cost of US$528 per feddan, 17 percent above the appraisal

estimate.

50. While there were some initial delays before the loan became effective, it was a period

when there was no financial outlays made from the project and consequently, the impact on the

project efficiency was minimal. However, once the project started to incur costs and there were

delays in implementation, for example, during the political upheavals in 2011 and 2012, benefits

from the project got delayed after substantial expenditure9

had been incurred. While no

calculation has been attempted, based upon the one-sided impact on the benefits getting

postponed while substantial expenditures have been incurred, the impact of the delays from the

political upheavals in the middle of the implementation period can be assumed to have a more

substantial impact on the project efficiency.

51. The appraisal’s economic analysis assessed the economic soundness of the project

based on the Economic Rate of Return (ERR) and Net Present Value (NPV), both of which had

been calculated from projected incremental costs and benefits to society as a whole, using the

with- and without-project approach. Yields were expected to grow gradually during five years,

increasing from 4 percent to 25 percent depending on the crop, improvements financed, and the

location. The project was expected to have an ERR of 20.5 percent. The NPV, at a discount rate

of 12 percent (representing the opportunity cost of capital), was estimated at EGP 847 million

(about US$141 million equivalent).

52. The financial analysis at farm level estimated that farmers’ incremental income would

allow not only for the cost recovery of investments but also for a significant increase in family

income in the range of 12 percent to 26 percent. After debt service, family benefits were

expected to increase by 12 percent to 26 percent after the fifth year, depending on the farm size.

Therefore, the project was expected to contribute toward alleviating poverty in project areas.

This is confirmed by the significant increase in the value of land and rental costs in the newly

improved areas as compared with similar neighboring unimproved areas10

.

53. The economic analysis is based on the results obtained at completion at the crop/activity

level, preparation of representative farm models, the type of improvements financed, and the

areas benefited by each type. Based on the assumptions described in Annex 3, the project ERR is

recalculated at 12.2 percent (instead of the 20.5 percent estimated at appraisal) 11

. The NPV at a

9 In constant 2016 U.S. dollar, about 51 percent of the project expenditures had been incurred before 2013.

10 The increased value of land and rental costs in improved areas is due to the higher expected NPV of benefits

derived from the project investments. It was not quantified in the economic and financial analyses because it would

mean double counting the same project benefits. 11

Couple of key differences in assumption also arose during project implementation regarding the benefit from

water savings. Water savings which were assumed as a benefit at appraisal were not included for the ICR because

water lost to drains or groundwater aquifers and ‘saved’ in improved buried mesqa and marwa areas was (and is)

anyway reused downstream by other farms to a large extent. Essentially, it can be argued that water is not really

‘saved’. That is the reason why in the economic analysis, no value was assigned to the water ‘saved’. Similarly,

achieving ‘continuous flow’ (see footnote 2 to see what it implied) could even have a negative NPV, because it

incurred considerable costs, including monitoring costs by the farmer, but it did not produce perceivable benefits in

15

discount rate of 6 percent (representing the marginal utility of consumption of the project

beneficiary)12

is estimated at EGP 1,350 million (about US$153 million equivalent). Using the

same discount rate as for the analysis at appraisal of 12 percent, the NPV would still be positive

at EGP 27.56 million, or about US$3.13 million equivalent.

3.4 Justification of Overall Outcome Rating

Rating: Moderately Satisfactory

54. The overall outcome rating for the project is Moderately Satisfactory because it is rated

High on relevance of objectives, Substantial on relevance of design/implementation and

achievement of its objectives, and Modest on efficiency.

3.5 Overarching Themes, Other Outcomes and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development

55. Poverty impact. More than 70 percent of the farmers in the project area have

landholdings of less than 3 feddans, with some 38 percent having holdings of less than 1 feddan.

Consequently, the significant reduction in irrigation costs from EGP 300 per m3 per crop to EGP

150 per m3 per crop, the increase in yield of main crops by 15 percent, and improvement in

equity in water availability from project design/implementation at the mesqa will have a

significant effect in the reduction of poverty in the project areas.

56. Gender. Although not targeted specifically by project interventions, significant numbers

of female are expected to benefit. In addition, during administration of TA, it was found that

although their land ownership could be limited, the women were very much involved in water

management. Female farmers are heavily engaged in agriculture particularly during sowing,

harvest, and postharvest work. It is estimated that 20 percent (over 90,000) of the water users,

who were provided with new/improved irrigation and/or drainage, were female.

57. Adaptation to climate change. The project activities will enhance adaptation to climate

change in irrigation water management through the improvement in the hydraulic infrastructure.

The replacement of open mesqas (from which farmers push water with diesel pumps

individually) with underground piped mesqas served by communally managed electrical pumps,

resulted in a reduction in the use of diesel and also a reduction of the emissions of the

greenhouse gas CO2. The replacement of individual diesel pumps resulted in a decrease of 80.62

kg of CO2 per feddan per year. With a total farm area of 92,085 feddan of improved mesqa area

from SSD systems, it amounts to a reduction of over 7.4 million kg of CO2 per year. This is

expected to go up further when all diesel pumps are replaced by electric pumps.

(b) Institutional Development Achievements

that mesqa, in terms of yield and without the water savings for the whole system. Definitely, the farmers at any

particular mesqa had no incentive to incur the cost of monitoring and coordinating. 12

See Discounting Costs and Benefits in Economic Analysis of World Bank Projects, OPSPQ. May 9, 2016. “Where

no country-specific growth projections are available, we suggest using 3% as a rough estimate for expected long-

term growth rate in developing countries. Given reasonable parameters for the other parameters for the other

variables in the standard Ramsey formula linking discount rates to growth rates, this yields a discount rate of 6%.”

Note prepared by Marianne Fay (GGSVP) et al., February 18, 2016.

16

58. Project activities have strengthened and enhanced the institutional capacity for more

efficient operation and management of the water resources with 3 IWRIGDs established at

Beheira, Gharbia, and Kafr El Sheik and 9 DWBs established in the project area, with 22

IWMDs. All these are aimed at resolving the concerns of a fragmented water service delivery.

Further institution development focused on the farmers with the establishment of 308 BCWUAs

and 2,070 WUAs at the mesqa level.

4. Assessment of Risk to Development Outcome

Rating: Moderate

59. The risk to the development objectives is considered to be Moderate. The project has

provided good quality and more efficient small pumping stations, and has strengthened the

decentralized irrigation service delivery. The WUAs established for the mesqas have incentives

to ensure that the systems continue to operate successfully because each farmer depends on the

efficient and equitable distribution of the available water resources. The risk to the sustainability

of the mesqa infrastructure is negligible, and the farmers should continue to benefit from the

reduced irrigation costs brought about by the project.

60. The Government is committed through annual budgetary allocations to operating and

maintaining the irrigation and drainage infrastructure as they are critical for the survival of

agriculture.

61. Cost recovery. Law 213 of 1994 provides for recovery of mesqa improvement costs

from the landowners benefiting from such investments.13

. The costs of pump sets are repaid

within three years, while repayment of the cost of civil works takes place over 20 years. Costs

are repaid without interest. Collection of the instalments is the responsibility of the Land Tax

Authority (LTA). After deduction of fees for the LTA and IIS, the amount collected is paid into a

revolving fund which is intended to be used for further mesqa improvement.

62. Until 2013, arrangements to start the cost recovery were delayed while a decision was

being awaited as to whether the costs of electrification should also be included. During summer

2013, a formal decision was made by the MWRI in conjunction with the Ministry of Finance that

the costs of the electricity networks should be taken into account for the cost recovery, with

repayments to be made over 15 years.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory

63. The rating is based on the following strengths: (a) a clear analysis of the alternatives

including a review of lessons learned from earlier projects that led to emphasizing improvement

of management of irrigation and drainage to increase the efficiency of irrigated agriculture water

use and services and (b) the identification of the need for improvements both in the institutional

13

Similar arrangements exist for subsurface drainage works.

17

arrangements, where multiple agencies provided services, and infrastructure to improve the

equity, timeliness of water supplies, and costs to farmers.

64. The World Bank was possibly overoptimistic about overall readiness and preparedness to

launch the project. For example, detailed studies of the canal systems were needed before critical

major civil works contracts could be awarded but were unavailable at entry. This might have

increased the implementation period. However, this activity was not in the ‘critical path’ because

mesqa-level work was being carried out in parallel and consumed more time than what was

required for the detailed studies. The seven-year project was indeed delayed by two years but it

was mainly due to political upheavals during 2011–2013. Similarly, better estimates of costs of

the mesqa-level work might have been obtained through sampling the needs at different locations,

instead of from one pilot, at appraisal. Again, this increase in cost was modest, of the order of 15

percent, and more detailed sampling would have increased project preparation costs.

65. Contrasting the above shortcomings, of course, are how the World Bank preparation team

had correctly identified the problem/issues and set the stage for the implementation effort to

persevere in the right direction. The preparation effort set the stage for a two-pronged effort that

would lead to organizational changes at the MWRI as well as set the structure to carry out

systematic mesqa- and marwa-level design efforts at over 1,500 locations, addressing, among

other things, piping open canals in a concerted manner under the MWRI. Even the apparently

long period between approval and effectiveness was actually well utilized. When this project was

approved, projects in Egypt were regularly held up at the legislative body and delay of a year or

so was the norm. This project was reviewed twice at the legislative body and consequently, much

of the period between approval and effectiveness required the attention of the World Bank staff

to address the queries at the legislative body that included obtaining legal opinions, which indeed

was accomplished.

(b) Quality of Supervision


66. The World Bank supervised the project regularly throughout the implementation period.

Early supervision rectified the lack of detailed engineering designs on large civil works but

found the uptake of the mesqa improvement more challenging. Delays arose because of the slow

pace of social mobilization of beneficiaries. The slow pace at the mesqa level were not only due

to getting a large majority (75 percent) to agree to the plan at over 1,000 locations but also

because mesqa improvement costs have to be recovered from the individual farmers14

. The

World Bank supervision played an important role to have these mesqa-level designs critically

reviewed and keep the overall costs of the project within control. In addition, throughout the

lifetime of the project, the World Bank task team was proactive and helped the Government

restructure the project so that implementation could catch up with the original schedule after

political upheavals (for example, by increasing the percentage of expenditures to be financed by

the World Bank), and when that became infeasible, extend the closing date. The number of

supervision missions undertaken was sufficient and the skills mix was good. Aide memoires

were regularly prepared and transmitted, which alerted the Government and the World Bank

management to problems with project implementation and suggested remedies on time.

14

See paragraph 60.

18

67. Lastly, although the MTR was particularly delayed in terms of elapsed time since project

launch (five years), it was appropriate in terms of proportion of project expenditure before the

MTR. Because of the participatory process and the slow uptake of the mesqa improvement

indicated above as well as the 2011 political upheaval, the project had spent a little less than 30

percent of the US$303 million of the project funds (as indicated in the PAD), when the MTR was

undertaken. The need for sufficient investment with enough evidence on implementation

precluded an earlier MTR.

(c) Justification for Rating of Overall Bank Performance


68. Overall Bank performance is rated Moderately Satisfactory, reflecting the Moderately

Satisfactory rating for both World Bank performance in ensuring quality at entry and for quality

of supervision.

5.2 Borrower Performance

(a) Government Performance


69. The rating is based on the following: ownership that included providing counterpart

funding more or less as planned and senior officials availing themselves to the World Bank

missions without fail. The authorities supported implementation arrangement, including

appointment of key staff, and initiated restructuring requests as and when required.

(b) Implementing Agency or Agencies Performance


70. The responsibilities for actual implementation of the various civil works contracts was

assigned to the HEPS, IIS, IS, and EPADP. Although each of these agencies performed

satisfactorily during the latter period of the loan, there was slow progress during the first years of

the project, maybe because of the steep learning curve of coordination at various levels. Progress

accelerated in the last four years as all contracts were awarded, and the departments could focus

on contract management, ensuring that the works were completed on schedule. During this time,

the departments also became more proactive, prepared to terminate underperforming contractors

and appoint new contractors to complete the works.

71. The PMU was established following a formal Government Decree and functioned

satisfactorily throughout the project period. The PMU had the important task of monitoring and

coordinating the activities and performance of the other agencies. The PMU regulated the

procurement activities on the project and was responsible for the financial aspects including

making disbursements for all project activities and making appropriate withdrawal from the

World Bank.

72. Compliance with safeguards requirements on the electrical contracts with land and crop

compensation was only resolved during the final stages of the project. This issue, had it been

identified sooner, could have helped earlier completion on the electrical contracts with better

results on operationalization of WUAs.

19

(c) Justification of Rating for Overall Borrower Performance


73. Overall borrower performance is rated as Moderately Satisfactory, reflecting Moderately

Satisfactory rating for both the Government and the implementing agency performance.

6. Lessons Learned

74. The main lessons learned from implementation of the project are as follows:

Design projects more realistically by limiting outcomes to project’s direct

influence. In the IIIMP, some assumptions were made during project preparation,

such as environmental mainstreaming and continuous flow, which were conceptual

in nature and found to be infeasible during implementation. During implementation,

arriving at a more realistic project design rested on separating what was within the

project’s direct influence from broader benefits outside its influence. For example,

outside project’s influence included environmental mainstreaming because it was

not part of the mandate of the MWRI. Outside project’s influence also included

items which were incentive incompatible. For example, continuous flow required

farmers to participate/monitor without substantial benefits accruing to that particular

farmer. The lesson learned is that limiting outcomes to project’s direct influence

make project design more realistic.

Be ready for implementation with priority contracts ready to be tendered. Both

the World Bank and the Government should be more realistic in assessing the time

required to launch such a complex project. Before loan award a more rigorous

assessment of the readiness of each of the separate agencies was needed, with the

Steering Committee established to ensure coordination and establish priorities for

the overall implementation process. The lesson learned is that selected priority

contracts should be ready to tender soon after Board presentation.

Irrigation management and infrastructure improvements must go hand in

hand. Project experience has demonstrated that irrigation improvement is not

merely a matter of adding measurement and control structures but also requires a

mindset change: irrigation services for farmers and existing institutional

arrangements must be systematically analyzed and redefined. The lesson learned is

that project design in irrigation management has to be based on a combination of

infrastructure improvement and management solutions (for example, improvements

in monitoring, planning, institutional capacity, and operation).

Beneficiaries’ participation enhance benefits. The project interventions provide a

better service for farmers in water deliveries and improved controls, and during

implementation nearly 120,000 person months of employment was created. In

addition, the project is expected to generate employment for O&M and for

incremental labor as a result of increased agricultural intensification. The lesson

learned is that creating WUAs not only benefits the design, improving both the

objectives of equity and efficiency of water usage, but also brings valuable

20

additional employment opportunities both during construction and beyond in these

communities.

Procurement of civil works and contract management could be improved with

larger procurement packages. With smaller procurement packages, sometimes 4–6

fully qualified contractors were unavailable to bid for such a package. The smaller

packages did not appeal to the best-quality contractors. Usually, in these very

specialized works, the best-quality contractors develop a pool of smaller contractors

through subcontracting and monitoring them. Instead, the Project Implementation

Unit often had to undertake close monitoring of the smaller contractors, thereby

increasing project monitoring costs. The lesson learned is that a project with very

specialized works needs to be packaged in larger procurement packages that would

maintain the high standards for contractors for all packages and where capacity of

smaller local contractors would take place through subcontracting. The Project

Implementation Unit would then have to monitor fewer and more reliable

contractors, bringing down project costs.

Transparency and accountability are core elements of performance

management and service delivery. During project implementation, accountability

and governance were strengthened on the side of the service providers, the MWRI,

and the Ministry of Electricity as well as for the recipients (farmers) of the service.

The lesson learned is that to overcome problems of poor maintenance and

inadequate service delivery in irrigation, it is important to have a clear agreement

between the MWRI, the Ministry of Electricity, WUAs, and farmers about

respective roles and responsibilities, proper financing arrangements, and

transparency and accountability in monitoring the agreement.

Sustainability beyond maintenance of works may require legal changes. Resource constraints imply that success of the post-completion operation/next phase,

as indicated in section 2.5, will depend largely on the WUAs. The involvement of

the farmers at all stages of the development of the mesqa contracts, including the

design layout and location, has ensured that the community has a strong sense of

ownership of the system, and this should also ensure its overall sustainability. In

addition, the MWRI is expected to maintain the availability of water through the

main and branch canals. Notwithstanding the above, sustainability beyond

maintenance of works has not been fully addressed. The lesson learned is that when

the implementing agencies are all project-oriented and once the works are completed,

there is no support for the farmers in terms of specialist training to use the water

well. In theory, agricultural extension is available but that institution tends to focus

on crop and livestock production, not on the particular skills needed to operate an

irrigation system efficiently. To have that level of sustainability, more institution

building is needed where BCWUAs and DWBs have legal powers and users have a

greater stake in the management, operation, and maintenance of the infrastructure.

21

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners

(a) Borrower/implementing agencies

22

75. No additional comments required.

(b) Cofinanciers

On the comments from KfW:

76. The Implementation Completion and Results Report (ICR) elaborated the project’s

inability to deliver electrical power to all pumping stations (and consequently operationalizing

fully all WUAs) at various places (see paragraph 21 for example), and captured the issue of

project costs in the section on Efficiency. The ICR, as well as the borrower’s completion report

found ‘continuous flow’ to be of limited benefit to the farmer and incompatible with the

incentives at the farm level (see footnote 4 and Lessons Learned). Lastly, the ICR acknowledges

the legal weakness of IWMD and how that could exacerbate issues related to sustainability (see

Lessons Learned). However, as experience with other countries, including that in California in

the United States, suggests, such legal changes have usually required a much longer period to

align interests of all water users.

On the comments from NDC:

On the conversion of diesel pumps to electrical units:

77. The ICR indicates the reduction of costs at the farm level in the Results Framework (on

page iii). Indicator 4 puts this as 50 percent. This is a snapshot and would vary with changes in

relative prices of diesel compared to electricity. In terms of environmental sustainability/climate

change, the ICR does not delve into details of various possible solutions but just indicates what

was achieved under the project (see paragraph 57). The replacement of individual diesel pumps

resulted in a decrease of 80.62 kg of CO2 per feddan per year. With a total farm area of 85,200

feddans of improved mesqa area, it amounts to a reduction of 6,869 tons of CO2 per year, not

counting the CO2 emitted for the generation of the electrical power. This is expected to go up

further when all diesel pumping is replaced by electric pumps.

On the role of women in water management:

78. The ICR in the Results Framework (page iv) reports 20 percent of beneficiaries to be

women (based on gender segregated data in all soft aspects of the project that the IIIMP

collected). The ICR downplays the provisions for women as elected members of water boards

and so on, because the legal basis for them is incomplete, but has incorporated the NDC’s view

of women’s role in water management in paragraph 56.

(c) Other partners and stakeholders

79. Not available.

23

Annex 1. Project Costs and Financing

(a) Project Cost by Component (in US$, millions equivalent)

Components

Appraisal

Estimate (US$,

millions)

Actual/Latest

Estimate

(US$,

millions)

Percentage of

Appraisal

Component 1

Improved and Integrated Water Management 224.92 226.02 100

Main canals 21.70 18.13 84

Branch canals and mesqa improvement 95.10 136.14 143

Subsurface and open drainage 70.80 49.98 71

Component 2:

Improved On-Farm Water Management 4.62 0.58 13

Component 3:

Institutional Development and Capacity Building 14.29 9.17 64

Establish BCWUA and DWBs 5.00 1.35 27

Establish mesqa WUA 5.90 2.98 51

Component 4:

Project Management, Coordination, and Integration 10.99 13.57 123

Establish and operate PMU 6.40 8.11 127

Component 5:

Environmental Mainstreaming 5.00 0.07 1

Total Baseline Costs 259.82 249.41

Physical Contingencies 21.14

Price Contingencies 19.04

Total Project Costs 299.99 249.91 83

(b) Financing

Source of Funds

Appraisal

Estimate

(US$, millions)

Actual/Latest

Estimate

(US$, millions)

Percentage of

Appraisal

Borrower 105.00 57.71 60.6

International Bank for Reconstruction and Development 120.00 118.56 98.8

KfW 53.00 60.93 115.0

NDC 25.00 10.76 43.0

24

Annex 2. Outputs by Component

Component 1: Improved and Integrated Water Management

1. Component 1 generally comprised all the infrastructure rehabilitation and modernization

required to achieve the project objective of improving the management of irrigation and drainage

in the project area. The project was an integrated package with the benefits targeted at the

individual small-scale subsistence farmers at the tail end of the system through the

modernization of the mesqas and marwas, but this process was dependent on improving and

modernizing all the upstream infrastructure so that the benefits can be achieved. Thus, the first

zones targeted by the project were the two main canals serving the area—the Mahmoudia and

Meet Yazeed main canals—and 27 contracts were completed for works including dredging of the

Mahmoudiya canal, rehabilitation of major structures including locks, cross-regulators, and

bridges, installation of bored and sheet pile bank protection works, reprofiling and stabilizing

embankments with stone pitching and internal drains, construction of reinforced concrete ‘U’

sections to replace unstable sections of the main canal, seepage control works, and the

replacement of syphons.

2. The second zone targeted under the IIIMP covered all the branch canals which served the

mesqas selected for upgrading. A total of 445 km of branch canals were upgraded under the

IIIMP. A total of 43 branch canals were rehabilitated with works including bank stabilization,

new road and foot bridges, repair or replacement of cross-regulators, improved mesqa offtakes,

construction of boxed culverts through residential areas, and construction of some lined sections.

Contracts were awarded to install ultrasonic flow measurement systems in the main and branch

canals. Gauges were installed at 28 sites.

3. Mesqa improvement is the largest part of the IIIMP and a total area of some 85,347

feddans was completed with works including providing intakes from the branch canal, gravity

pipelines to the concrete pump sump, pump house with electric pump units and a standby diesel

pump, suction and delivery pipework, electrical fittings including a meter, and a buried PVC

pipe distribution network. In some contracts, provision was made to extend the pipe distribution

system to include the marwas. A total of 52 contracts were awarded for all these works.

4. Providing electricity to the pump houses and handing over operational mesqa pump

stations to their WUAs were less successful. While 1,530 WUAs were targeted to be

operationalized, only 1,162 were handed over as fully operational at project closure, largely

because of the poor performance of the electrical contractors. Government funds, which are

already budgeted, will complete the electrical contracts, ensuring that all 1,530 mesqas receive

project benefits.

5. SSD works were also a large part of the IIIMP, with over 92,085 feddans provided with

either new or rehabilitated drainage systems, exceeding the 85,000 feddan target. Payment of

crop compensation is a critical element in this component, and EPADP and its site staff ensured

that the regulations were followed on the amounts to be paid to the farmers.

25

Component 2: Improved On-Farm Water Management

6. Component 2 focused on improving on-farm water management carrying out on-farm

demonstrations for farmers, and arranging farmer excursions to other successful areas on the

project or to demonstration plots. Other activities under this component included capacity

building through training of teachers for Irrigation Advisory Service (IAS) and Central

Department for Irrigation Advisory Services (CDIAS) extension staff in coordination with the

MWRI Training Centre. With the adaptive research handed over to the EWRMP, this component

focused on the remaining areas including demonstrations and farmer excursions.

Component 3: Institutional Development and Capacity Building

7. A major focus of this component was the proper establishment, expansion, and upscaling

of the WUA concept to other levels within the system. The project established some 308

BCWUAs and provided 208 training courses to strengthen and develop the overall concept.

DWBs were established at nine centers, and start-up workshops and training courses were

organized at each center. Establishment and strengthening of the WUAs at each mesqa was a

major part of the work under this component; the project established 2,070 WUAs in total and

provided 242 training courses for these WUAs. The project also established three IWRIGDs in

Beheira, Gharbia, and Kafr-El-Sheikh, rehabilitating the offices and providing equipment.

Finally, the project also established 22 IWMDs. Under this component, 15,525 people, including

1,926 females, were trained in various aspects of project management and operation.

Component 4: Project Management, Coordination, and Integration

8. The PMU is established under this component with a coordinating, monitoring,

evaluation, and problem-solving role on all the separate components. The PMU assigned the

responsibility for implementation of the project works to the HEPS, IIS, IS, and EPADP. This

approach for project implementation was effective, utilizing the specialties and expertise

available within the MWRI. In addition, the PMU appointed a consultant to provide technical

support for assistance to the PMU, to prepare the designs for rehabilitation of the selected canals,

and to provide support during project implementation. During the latter years, this technical

support from the consultant was focused on the mesqa improvement works rather than the major

civil works carried out by HEPS. The PMU was responsible for all procurement activities and

during implementation all disbursements were made through the PMU. The PMU prepared the

overall project activity chart and reported progress regularly on all activities carried out on the

project. The PMU was prepared to be proactive in searching for solutions to accelerate progress

and took action when necessary on slow-moving contracts.

Component 5: Environmental Mainstreaming

9. Component 5 aimed to develop public awareness and environmental mainstreaming for

the project components. This component, funded under Dutch Aid, aimed to ensure that standard

environmental concerns were addressed by the project; the component ensured that numerous

technical studies and evaluations were carried out including the preparation of the ESMP,

environmental impact assessments, social mitigation plans, and updating of RAPs and these were

completed in the early years of the project. Completion of these studies and reports were

26

generally required before approval for implementation of the works. In 2014, all remaining

environmental mainstreaming activities were taken over by EWRMP. Some awareness

campaigns continued under the IIIMP to board members of 56 BCWUAs and 1,668 WUAs with

some 11,140 direct beneficiaries receiving awareness related to proper sewage and solid waste

disposal and water quality impacts, who in turn were expected to reach five family members on

average.

27

Annex 3. Economic and Financial Analysis

Summary of the Ex Ante Economic and Financial Analysis

1. The appraisal’s economic analysis assessed the economic soundness of the project

based on the ERR and NPV, both of which had been calculated from projected incremental costs

and benefits to society as a whole, using the with- and without-project approach. The expected

establishment of continuous (on-demand) water flow in branch canals and mesqas, together with

the off- and on-farm investments and activities such as marwa improvements and on-farm water

management, were expected to attain water savings of 10 percent to 30 percent depending on the

initial situation of the areas (unimproved or partially improved by previous projects), while at the

same time crops were irrigated more efficiently. Complementary on-farm improvements (piping

of marwas, use of hoses, gated pipes, improved furrows, laser land leveling (LLL) where needed,

and water management assistance) would result in improved water use efficiency and

distribution as well as water savings. Yields were expected to grow gradually during five years,

increasing from 4 percent to 25 percent depending on crop, improvement, and location.

2. Financial and economic prices were set using field data at constant 2004 values. Project

economic costs were derived by excluding taxes, duties, and subsidies and corrected with the

corresponding conversion factor (CF) to eliminate market distortions. Water savings were

expected to reach on average about 22 percent or 838 million m3

per year at project maturity.15

Assigning no economic value for the water saved, the project would have an ERR of 20.5

percent. The NPV at a discount rate of 12 percent (representing the opportunity cost of capital)

was estimated at EGP 847 million (about US$141 million equivalent). If the previous high-cost

design criteria used in the preceding IIP remain unchanged,16

and no marwa or on-farm activities

were improved (as under the IIP), the ERR would drop to 7.6 percent. If water was assigned an

economic value equivalent to the residual imputed economic value derived from the without-

project situation (EGP 0.46 per m3) which could be considered the opportunity cost of water,

17

the ERR would be 30.4 percent. The latter could be the adequate estimation of the IIIMP results

if water saved could be used in alternative new irrigation areas.

3. The financial analysis at farm level showed that farmers’ incremental income would

allow not only for the cost recovery of investments but also for a significant increase in family

income in the range of 12 percent to 26 percent. The main conclusions of the financial analysis

were (a) irrigation improvement would allow for significant savings in water use, with a parallel

average increase in gross value of production of about 20 percent after the fifth year; (b) before

debt service, family benefits were expected to increase between 13 percent and 27 percent from

the fifth year on, and the amount to be paid as debt service would represent only about 23

15

Water lost to drains or groundwater aquifers and ‘saved’ in improved buried mesqa and marwa areas was (and is)

anyway reused downstream by other farms to a large extent, so it can be argued that water is not really ’saved’. That

is the reason why in the economic analysis in the ICR, no value was assigned to the water ‘saved’. 16

Proposed new designs had significant reduction in material and backfilling costs. Old designs consider up to four

times the needed capacity of pumps and pipes. 17

Based on the residual imputation approach which approximates the marginal value of product of water, by

subtracting all costs of production except water from the total value of output, its economic value was derived.

Water used in the without-project situation in the project areas (3.7 billion m3) produces a net benefit of LE 1.7

billon (about US$290 million), about LE 0.46 per m3.

28

percent of the expected increases on farm benefits in the third year; and (c) the project would

lead to higher farm income for all the farm sizes. After debt service, family benefits were

expected to increase by an average of 20 percent after the fifth year, for all three models. The

project would contribute toward alleviating poverty in Egypt’s rural areas where it is most

intense.

Actual Implementation

4. There were significant differences between what was planned and what was actually

implemented because what was actually spent in real terms was only half the planned amount to

be invested. Table 3.1 shows that the actual expenditure in 2004 real U.S. dollar terms only

reached US$150.7 million.

Table 3.1. Current and Constant 2004 Projects Cost (US$, million)

Components Appraisal Actual

In Current US dollars Estimate Estimate Value Percentage

A. Improved and Integrated Water Mgmt 261.33 226.02 -35.31 86.5%

Branch Canal and Mesqa Improvements 82.74 112.24 29.5 135.7%

Marwa Improvements 33.4 25.77 -7.63 77.2%

Electrification 27.6 13.2 -14.4 47.8%

Drainage Improvements 82.07 49.98 -32.09 60.9%

Other 35.52 24.82 -10.7 69.9%

B. Improved On-farm Water Management 5.05 0.58 -4.47 11.5%

C. Institutional Development & Cap. Build. 16.04 9.17 -6.87 57.2%

D. Project Management, Coord. & Integration 11.53 13.57 2.04 117.7%

E. Environment Mainstreaming 6.06 0.07 -5.99 1.2%

Total 300.01 249.41 -50.6 83.1%

In Constant 2004 US dollars

A. Improved and Integrated Water Mgmt 261.33 136.14 -125.19 52.1%

Branch Canal and Mesqa Improvements 82.74 65 -17.74 78.6%

Marwa Improvements 33.4 1.27 -32.13 3.8%

Electrification 27.6 8.38 -19.22 30.4%

Drainage Improvements 82.07 30.13 -51.94 36.7%

Other 35.52 31.34 -4.18 88.2%

B. Improved On-farm Water Management 5.05 0.4 -4.65 7.9%

C. Institutional Development & Cap. Build. 16.04 5.99 -10.05 37.3%

D. Project Management, Coord. & Integration 11.53 8.14 -3.39 70.6%

E. Environment Mainstreaming 6.06 0.06 -6 1.0%

Total 300.01 150.73 -149.28 50.2%

Difference

Table 1. Current and constant 2004 projects costs (USD million)

29

The Ex Post Economic and Financial Analysis

Economic and Financial Analysis

5. This section summarizes the estimated results obtained by the IIIMP, based on the ERR

and the NPV calculated with FARMOD software. As at appraisal, the incremental costs and

benefits of the project to society as a whole, using the with- and without-project approach, was

followed. A description of the differences in costs and benefits and key underlining assumptions

are presented below, including market prices used for key input and outputs, shadow pricing, and

phasing of improvements. Incremental net benefits were obtained by deduction of the project

costs from increased revenues. These took account of the impact on productivity increases, cost

reductions through the new approach for improvement designs, and the electrification of pump

sets. Water savings which were assumed as a benefit at appraisal were not included for the ICR

because water lost to drains or groundwater aquifers and ‘saved’ in improved buried mesqa and

marwa areas was (and is) anyway reused downstream by other farms to a large extent.

Essentially it can be argued that water is not really ‘saved’. That is the reason why in the

economic analysis, no value was assigned to the water ‘saved’.18

6. The economic benefits of the project were calculated by estimating average crop and

activity budgets for the main crops and livestock components, and aggregating them in farm

models representing the three type of improvements: (a) areas previously not improved

incorporating new mesqas in 85,347 feddans; (b) areas previously improved but only at the

mesqa level incorporating piped marwas covering 24,546 feddans; and (c) areas with SSD

totaling 95,385 feddans.19

7. Crop budgets were built on data obtained through interviews with farmers in the

improved areas integrating the changes induced under the project including average yield

increases and irrigation cost reductions. In determining the production costs and yields obtained

before and after the project, and in estimating their future development, several sources of data

were used including the WaterWatch Studies performed in 2008 and in 2014 using remote

sensing approaches; the results of the M&E activities implemented under the IIIMP as well as

field observations from the ICR mission. The cropping patterns did not show any significant

change as a direct result of the project investments. Cropping intensities were assumed to be 188

percent without project and 194 percent with project, considering that there was a 3–5 percent

increase in land use as the open mesqas and marwas were piped and buried. Table 3.2 shows the

assumed cropping pattern.

Table 3.2. Cropping Pattern in the Project Area

Cropping

Pattern

Before

Improvements Current Situation

Changes in

Area

Crops in Project Area % (feddan, thousands)

Winter 79.0 172.1 178.1 6

18

Achieving ‘continuous flow’ (see footnote 2 to see what the term implied) could even have a negative NPV,

because it incurred considerable costs, including monitoring costs by the farmer, but it did not produce perceivable

benefits in that mesqa, in terms of yield and without the water savings for the whole system. 19

The original planned coverage had to be revised because of the diminished value of expenditures in 2004 real U.S.

dollar terms.

30

Wheat 20.0 42.0 42.0 0

Berseem (long season) 10.0 21.6 21.6 0

Berseem (short season) 25.0 53.9 53.9 0

Broad beans 3.0 6.2 6.2 0

Winter vegetables 21.0 48.5 54.5 6

Summer 70.0 151.4 157.4 6

Cotton 16.0 35.1 35.1 0

Rice 30.0 64.6 64.6 0

Maize 16.0 34.5 34.5 0

Summer vegetables 8.0 17.2 23.2 6

Orchards 21.0 43.1 43.1 0

Cropping Intensity — 1.88 1.94 —

8. Project benefits in terms of increased productivity are shown in table 3.3, which were

assumed to be realized smoothly during the five years following the completion of improvements

at the benefited farm level in 117,700 farms or 215,000 feddans. Average crop budgets were

estimated for the 10 major crops in the two command areas, as well as an activity budget for

milk and meat production as berseem, one of the major crops in the Delta (35 percent of the

winter crop areas), is used mainly for feeding cows and buffalos. Tables 2 to 12 in the IIIMP

ICR.xls file (in the project files) present the crop and activity budgets, including the yields,

inputs, and costs for the cultivation of 1 feddan area before and after the project.

9. From the three sources of data taken into consideration—the WaterWatch remote sensing

report, the Water Management Research Institute (WMRI) monitoring data, and the observations

from the field and interviews with farmers’ benefited groups during the ICR mission—the

following relevant conclusions are summarized:

(a) WaterWatch studies concluded that the yield differences in rice-cultivated areas

between the improved and unimproved areas (considering the summers of 2008 and

2014) showed (i) slightly higher ET/water consumption; (ii) 3–10 percent lower ET-

deficit; and (iii) 1–2 percent higher yields.

(b) The WMRI reported that, “improving subsurface drainage is a main factor that could

result in an increase of productivity up to 20 percent.” The WMRI also reported that

irrigation costs for rice in El Mahmoudia command area before and after the

improvements decreased by EGP 234 per feddan (65 percent) at the head of the

canals according to farmers’ estimates, while at the tail end the average reduction

was about EGP 200 per feddan (48 percent). Similarly, in Meet Yazid canal

command area these reductions averaged to EGP 175 (53 percent) and EGP 133 (42

percent) at the head and tail end of the canals, respectively.

(c) From the ICR mission visits to improved works at several project sites including

mesqas from El-Ezbah on the Nekla Canal, farmers reported that with the project

yields have increased about 20 percent to 30 percent at the tail end of the canal,

while irrigation costs were reduced from an average of EGP 500 to EGP 200 per

feddan.

31

7. Based on these sources, the assumed incremental yields for this ICR impact assessment

for the main crops in the project area are summarized in Table 3.3:

Table 3.3. Expected Incremental Yields by Crop

Mesqa Improved Areas SSD Improved Areas

Without With Increase Without With Increase

Crop/Activity Project Project % Project Project %

Maize 3.300 3.475 5 3.600 4.000 11

Rice 3.500 3.675 5 3.700 4.000 8

Cotton 1.200 1.260 5 1.300 1.500 15

Summer vegetable 9.000 9.450 5 11.000 12.500 14

Wheat 2.400 2.520 5 2.700 3.000 11

Broad beans 1.100 1.160 5 1.200 1.330 11

Winter vegetable 11.000 11.500 5 12.000 13.500 13

Berseem long season 30.000 31.500 5 35.000 39.000 11

Berseem short season 22.000 23.000 5 23.500 27.000 15

Citrus 9.000 9.500 6 10.000 11.500 15

Milk 1,500 1,575 5 1,600 1,700 6

Meat 150 158 5 160 170 6

11. Project benefits were assumed to accrue over a period of 15 to 20 years, consistent

with the life cycle of major improvements.

12. Financial and economic prices have been estimated for this assessment using 2016 data

and are presented in Table 3.4. CFs for shadow pricing were based on estimates prepared by the

ICR Borrower’s report built on World Bank Commodities Price Forecasts dated March 2016. For

nontraded commodities, such as berseem and other forages, the financial prices were assumed to

represent fairly well their economic prices. Future prices for traded inputs and outputs are not

expected to show major variations according to the most recent World Bank forecasts. A CF of

0.7 was considered for labor costs, and CFs of 2.06 and 1.4 were used for diesel and electricity

costs, respectively.20

20

The GOE has been cutting back fuel subsidies, and hence the diesel oil price has increased now to LE 1.80 per liter.

In real terms, however, it has only increased by 20 percent since 2004. Electricity generation is favorably affected by

the larger natural gas reserves, which will maintain electric power generation (by gas turbines) at a reasonable cost.

Farmers purchase electricity at the concessional rate of LE 0.27 per kWh, whereas commercial tariff is LE 60 per

kWh. In real terms, the electricity tariff for agriculture has not increased since 2004. However, because one of the

major sources of benefits from the IIIMP improvements are derived from reduced irrigation costs (by switching

diesel to electricity pumping), a sensitivity analysis was done and presented in this assessment report, using the U.S.

costs for these to sources of energy, given that there is no reliable estimation of their economic costs and CFs in

Egypt’s changing environment.

32

Table 3.4. Output and Input Financial and Economic Prices

13. Project economic costs were derived from the financial costs by excluding taxes, duties,

and subsidies (table 3.5) and expressed in 2016 constant prices using the gross domestic product

deflator.21

As at appraisal, all investment costs were included in the cost stream for this analysis

with the exception of those from the environmental component.

Table 3.5. Current and Constant 2016 - Project Costs (US$, millions)

Current U.S.

dollars 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total

Component 1 1.01 3.45 11.93 27.93 23.16 14.99 27.49 41.72 50.33 22.66 224.65

Component 2 0.33 0.07 0.09 0.01 0.06 0.02 — — 0.58

Component 3 2.01 0.39 0.61 0.72 0.98 0.98 1.74 1.61 0.10 0.02 9.17

Component 4 1.42 1.69 1.57 1.86 1.38 1.31 0.99 1.51 1.64 0.13 13.49

Component 5 — 0.00 0.04 — — 0.01 0.02 — — — 0.07

Total Current U.S.

dollar 4.77 5.60 14.13 30.61 25.51 17.29 30.30 44.85 52.07 22.81 247.95

Constant 2016 U.S.

dollar 11.3 11.9 26.9 52.9 39.5 23.8 38.3 50.8 53.4 22.8 331.6

14. Benefits, phasing, and buildup. As mentioned, the project spent about 50 percent of the

original budget in constant 2004 costs. Additionally, implementation has been slower than

expected due to, among other things, slow process at the mesqa level to get the full commitment

of the farmers as well as political upheavals. The project restructuring and the extension of the

closing date until March 2016 provided the opportunity to complete improvements of farm areas

of the revised targets and the main canal works in the project areas. Table 3.6 and Table 3.7

show the pace of implementing the project improved areas.

21

http://data.worldbank.org/indicator/NY.GDP.DEFL.KD.ZG?page=2.

FINANCIAL ECONOMIC FINANCIALECONOMIC

(In LE) Price Price Conversion Price ` Price Conversion

Unit 2016 2016 Factor Unit 2016 2016 Factor

Outputs Inputs

Winter Crops Fertilizers

Wheat ton 2,936 3,170.88 1.08 Urea (45%) 50 kg 100 109 1.09

Berseen ton 320 320 1 Ammonium Nitrate (33%N) kg 1.5 1.635 1.09

Broad beans ton 5,100 5,100 1 Phosphoros 50 kg 75 81.75 1.09

Summer Crops Agrochemicals

Rice ton 2,100 2,231 1.06 Irrigation costs

Maize ton 2,250 1,935 0.86 Pumpset Depreciation (diesel) hr 3.1 3.1 1.00

Cotton ton 10,162 9,450.66 0.93 Pumpset Depreciation (electric) hr 0.93 0.93 1.00

Fruits and Vegetables Pumpset Maintenance (diesel) hr 6.69 6.69 1.00

Cabbage ton 740 740 1.00 Pumpset Maintenance (electric) hr 1.67 1.67 1.00

Citrus ton 2,741 2,192.8 0.80 Diesel lt 1.8 3.708 2.06

Tomato ton 1,443 1,154.4 0.80 Electricity KWH 0.27 0.378 1.40

Animal products Other production costs

Milk lt 3.85 2.695 0.70 Tractor hr 250 237.5 0.95

Meat kg 25 17.5 0.70 Mechanic harvesting hr 125 118.7 0.95

Threshing hr 100 95 0.95

Winnowing hr 50 47.5 0.95

Sprayer hr 70 66.5 0.95

Maintenance Open Mezcas lumpsum 200 190 0.95

Labor Person day 60 42 0.70

33

Table 3.6. Farms Per Subproject and Farm Size

New Unimproved

Farm Size

(feddan) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total

0.75 0 0 71 2,012 1,330 708 719 1,377 1,618 387 8,222

1.5 0 0 171 4,888 3,230 1,721 1,746 3,345 3,931 941 19,973

4 0 0 127 3,635 2,402 1,279 1,298 2,487 2,923 700 14,851

Total 0 0 369 10,535 6,962 3,708 3,763 7,209 8,472 2,028 32,142

Previously Improved

Farm Size

(feddan) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total

0.75 0 0 0 0 0 387 355 118 1,076 176 2,113

1.5 0 0 0 0 0 941 863 286 2,613 429 5,133

4 0 0 0 0 0 700 642 213 1,943 319 3,816

Total 0 0 0 0 0 2,028 1,860 617 5,632 924 11,061

Table 3.7. Area Per Subproject and Farm Size (Feddan)

New Unimproved

Farm Size

(feddan) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total

0.75 0 0 53 1,509 997 531 539 1,033 1,214 290 6,166

1.50 0 0 257 7,332 4,845 2,581 2,619 5,018 5,896 1,411 29,960

4.00 0 0 510 14,538 9,607 5,118 5,192 9,949 11,690 2,798 59,404

Total 0 0 820 23,380 15,450 8,230 8,350 16,000 18,800 4,500 95,530

Previously Improved

Farm Size

(feddan) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total

0.75 0 0 0 0 0 290 267 88 807 132 1,585

1.50 0 0 0 0 0 1,411 1,295 430 3,920 643 7,699

4.00 0 0 0 0 0 2,798 2,568 852 7,773 1,275 15,266

Total 0 0 0 0 0 4,500 4,130 1,370 12,500 2,050 24,550

15. Three different subareas covered by different improvements were considered for the

economic analysis: (a) 85,347 feddans of new areas with improved mesqas; (b) 24,546 feddans

of improved areas under previous projects incorporating improved marwas; and (c) 95,385

feddans of areas provided with SSD works.

16. Economic results. The evaluation exercise conducted with FARMOD software allowed

for the analysis at the crop/activity level, for showing representative farm models per type of

improvement, and for the overall project area. Based on the stated assumptions, the project

shows an ERR of 12.2 percent (instead of the 20.5 percent estimated at appraisal). The NPV at a

discount rate of 6 percent (representing the marginal utility of consumption of the project

beneficiary)22

was estimated at EGP 1,350 million (about US$153 million equivalent) as shown

in Table 3.8. Using the same discount rate used for the analysis at appraisal (12 percent), the

NPV was EGP 27.56 million, or about US$3.13 million equivalent. These result indicators are

22

See Discounting Costs and Benefits in Economic Analysis of World Bank Projects, OPSPQ. May 9, 2016.

“Where no country-specific growth projections are available, we suggest using 3% as a rough estimate for expected

long-term growth rate in developing countries. Given reasonable parameters for the other parameters for the other

variables in the standard Ramsey formula linking discount rates to growth rates, this yields a discount rate of 6%.”

Note prepared by Marianne Fay (GGSVP) et al., February 18, 2016.

34

not considering significant additional benefits from (a) the employment generation during a

period in which unemployment was exacerbated by the social unrest in the country; (b) the

environmental and climate change impact; and (c) the improved conditions for supplying water

to the city of Alexandria.

17. The nonquantified project impact. The project has spent a total of US$248 million in

the period 2007–2016 mainly for small rural works, which are rather labor intensive. It is

estimated that the equivalent of 26 million man-days of work have been created, plus a further 2

million annually for scheme O&M and for incremental labor as a result of increased agricultural

intensification.

18. Climate change impact. The replacement of open mesqas from which farmers push

water with diesel pumps individually, by underground piped mesqas served by communally

managed electrical pumps, results in a significant reduction in the use of diesel and also a

significant reduction of the emissions of the greenhouse gas CO2. The replacement of individual

diesel pumping results in a decrease of 80.62 kg CO2 per feddan per year. With a total farm area

of 85,200 feddans of improved mesqa area, it amounts to a reduction of 6,869 ton CO2 per year,

not counting the CO2 emitted for the generation of the electrical power.

19. Another nonquantified benefit was the improved conditions for supplying water to

the city of Alexandria which is 70 percent dependent on the Mahmoudia Canal for their

drinking water supply. Because of constrictions in the Mahmoudia Canal in the Kafr El Dawar

area, it was not possible to pass the required flow down the canal without excessively high water

levels and with high risk of breaches. Four contracts with a combined value of over EGP 24.1

million were implemented to enlarge the capacity of the Mahmoudia Canal so that sufficient

water could be delivered to Alexandria. Also, the dredging works below Kafr El Dawar from

44.77 km to 62.457 km ensured that the Mahmoudia Canal had sufficient capacity to supply the

water requirements for Alexandria.

20. Given the lower than anticipated economic results, the project efficiency is rated as

modest. The overall result is lower than the appraisal estimate because (a) the project spent half

of the budgeted amount (in 2004 real U.S. dollar) covering a smaller than the original planned

area with improved mesqas and marwas and (b) implementation was delayed because of political

unrest in 2011 and 2012. The main benefits are (a) an increase of about 10 percent in the gross

value of agricultural production because of the combined effect of slightly higher yields obtained

mainly at the tail ends of the water conveyance system and about 3 percent to 5 percent of

recovered land for production and (b) a decrease in irrigation costs mainly because of the single-

point electric pumping stations at the mesqa level, instead of thousands of individual farmers’

diesel pumps, together with reduced labor time required for irrigation. The lower irrigation costs

are consistently reported on the M&E reports prepared by the WRMI and were also verified in

the field by the ICR mission directly from beneficiaries.

35

Table 3.8. Economic Budget of the Project

ECONOMIC BUDGET (AGGREGATED)

(In LE Million) Without Project With Project

1 to 30 1 2 3 4 5 6 7 8 9 10 15-30

Main Production

Winter Crops 980 980 980 980 980 981 987 997 1,007 1,016 1,027 1,054

Summer Crops 1,208 1,208 1,208 1,208 1,208 1,210 1,217 1,229 1,242 1,255 1,269 1,304

Fruits and Vegetables 1,537 1,537 1,537 1,537 1,538 1,564 1,592 1,625 1,659 1,698 1,752 1,816

Animal products 912 912 912 912 912 913 917 923 930 936 942 959

Sub-total Main Production 4,637 4,637 4,637 4,637 4,638 4,669 4,713 4,774 4,838 4,905 4,990 5,133

By Products 108 108 108 108 108 109 109 111 112 113 114 118

Gross Value Of Production 4,745 4,745 4,745 4,745 4,746 4,777 4,823 4,885 4,950 5,018 5,104 5,251

On-Farm Use

Winter Crops 505 505 505 505 505 505 505 506 506 506 507 508

Summer Crops 22 22 22 22 22 22 22 22 22 22 22 22

By Products 63 63 63 63 63 63 64 64 64 65 65 67

Sub-Total On-Farm Use 591 591 591 591 591 591 591 592 592 593 594 597

On-Farm Consumption

Winter Crops 303 303 303 303 303 302 301 301 300 299 299 299

Summer Crops 218 218 218 218 217 217 217 216 216 215 215 215

Fruits and Vegetables 76 76 76 76 74 72 71 69 67 65 63 63

Animal products 317 317 317 317 317 317 317 317 317 317 317 317

Sub-Total On-Farm Consumption 914 914 914 914 911 908 906 903 900 897 895 895

Net Value Of Production 3,241 3,241 3,241 3,241 3,245 3,278 3,326 3,390 3,457 3,528 3,616 3,759

Purchased Consumption 8 8 8 8 7 7 6 5 5 4 3 3

INFLOWS 3,233 3,233 3,233 3,233 3,238 3,272 3,320 3,384 3,452 3,524 3,612 3,756

Production Cost

Investment

Mezca Improvements (incl pump & electricity - - - 11 316 209 111 113 216 254 61 -

Marw a Improvements - - - 2 47 31 25 25 35 63 13 -

Sub-surface Drainage - - - - 123 123 123 123 123 123 123 -

Sub-total Investment Costs - - - 13 485 362 259 260 373 439 196 -

Operating

Purchased Inputs

Winter Crops 18 18 18 18 18 18 18 18 18 18 18 18

Planting materials 118 118 118 118 118 120 121 122 123 124 127 127

Summer Crops 0 0 0 0 0 0 0 0 0 0 0 0

By Products 18 18 18 18 18 18 18 18 18 18 18 19

Fertilizers 282 282 282 282 282 285 286 288 289 290 294 294

Agrochemicals 65 65 65 65 65 66 66 66 67 67 68 68

Irrigation costs 147 147 147 147 147 146 140 132 124 119 113 96

Other production costs 546 546 546 545 539 536 534 531 527 521 522 524

Payments for Previous Improvements 1 1 1 1 1 1 1 1 1 1 1 1

Sub-Total Purchased Inputs 1,195 1,195 1,195 1,195 1,189 1,190 1,184 1,175 1,167 1,159 1,160 1,147

Labor

Labor 1,022 1,022 1,022 1,022 1,022 1,027 1,030 1,032 1,035 1,039 1,046 1,047

Sub-total Operating Costs 2,217 2,217 2,217 2,217 2,210 2,217 2,214 2,207 2,202 2,198 2,207 2,194

Sub-Total Production Cost 2,217 2,217 2,217 2,230 2,695 2,579 2,474 2,468 2,575 2,638 2,403 2,194

Other Costs

Other System Improvements - 16 17 30 36 25 50 47 76 53 38 -

Improved On-Farm Water Management - 5 1 - 1 - 0 1 0 - - -

Instit. Development & Capacity Building - 33 5 8 9 12 12 24 22 1 0 -

IIIMP Project Coordination - 30 3 27 29 21 21 17 25 28 2 -

Sub-Total Other Costs - 83 26 65 76 58 83 89 123 83 40 -

OUTFLOWS 2,217 2,301 2,243 2,295 2,771 2,637 2,556 2,557 2,698 2,720 2,443 2,194

Cash Flow 1,016 932 990 938 466 635 764 828 754 804 1,169 1,563

Net Economic Benefits 1,930 1,847 1,904 1,852 1,377 1,543 1,669 1,731 1,655 1,701 2,064 2,457

_________________________________

IRR = 12.2%

NPV = LE 1,350 million (with 6% discount rate) or LE 27.56 million (with 12% discount rate)

36

Sensitivity Analysis

21. One of the major sources of benefits of the project is the reduction in irrigation costs,

mainly from substituting diesel pumps for electricity pumps. In addition, the relative prices

between diesel and electricity may not necessarily reflect the reality of their opportunity costs

because of the existing distortions of the subsidy policies in Egypt. In the absence of a recent

study for determining the CFs for these energy market prices, a sensitivity analysis was made

using as a proxy the average values for diesel and electricity in the United States for estimating

alternative CFs.23

The project ERR under these parameters becomes 12.3 percent and the NPV

LE 1,372 million (US$155.9 million) when using 6 percent as discount rate or LE 37.1 million

when using 12 percent as discount rate. These values are almost identical to those obtained in the

base analysis.

Financial Analysis

22. Farm models allowed for the assessment of the project impact at the beneficiaries’ family

income level. Seven farm models were built to represent the beneficiaries’ income increases

induced by the project improvements. In the case of the first two subareas improved, they are

represented by three farm sizes: 0.7 feddans, 1.5 feddans, and 4 feddans, while for the third

subarea with SSD, a 1.5 feddans farm model was prepared. Tables 13 to 19 in the Appendix in

project files present the financial budgets including changes in farmer net income for the seven

farm models. In the farm budgets, full cost recovery of the on- and off-farm investments (up to

mesqa level) was included to analyze the payment capacity of small farmers and the resulting net

income after cost recovery. Farm models confirmed the financial justification of the project

improvements and the expected impact on rural incomes where most of Egypt’s poor make their

living.

23. Annual family benefits show a 5 percent to 12 percent increase after the

improvements and after payment of the annual installments for cost recovery of the investment.24

The annual net income weighted average of benefited households has increased by 8.2 percent

from US$5,957 to US$6,449 alleviating poverty in rural areas in Egypt. Table 3.9 shows the

number of farms represented in the project areas, and the expected family income increases after

full cost recovery of on-farm improvements.

23

Diesel and electricity in the United States average 63 U.S. cents per liter and 12 U.S. cents per kWh, respectively.

Converting these values into Egyptian pounds, the CFs become 3.08 (diesel) and 3.08 (electricity). 24

Since the late 1980s, the GOE has provided financial and technical support for the adoption of mesqa

improvements (including single-point pumping to each mesqa and the improved mesqa itself), coupled with the

development of WUAs to manage water distribution and maintenance. The package is usually well received by

farmers because it reduces pumping costs and water distribution inequalities and gives farmers greater control over

water management, resulting in increased productivity and enabling shifts to higher-value crops. The package also

includes mesqa improvement cost-sharing mechanisms between the GOE and the beneficiaries. For pumps, pump

houses, and auxiliary equipment, farmers pay the cost of the improvements in installments over a three-year period,

without interest. For mesqa, marwa, and drainage improvements, farmers pay the cost of the improvements in

installments over a 20-year period, without interest. In both cases, payments include 10 percent to cover the

MWRI’s administrative expenses.

37

Table 3.9. Farm Models and Expected Income Increases (EGP)

Income

Increase

After

Debt

Service

Model

Size

(feddan)

Area Per

Type of

Model

(feddan)

Number

of

Farms

Farmers Net

Income

(EGP/farm model)

Without

Project

With

Project

New Unimproved Project Areas 95,530 32,141

Model 0.75 feddans (6% of area) 5% 0.75 6,166 8,222 35,190 36,959


Model 4 feddans (63% of area) 10% 4.00 59,404 14,851 63,451 70,107

IIP and Other Projects

Improved Area 24,550 11,062



Model 4 feddans (63% of area) 12% 4.00 15,266 3,816 68,925 76,957

SSD Improvements

Model 1.5 feddan (100% of area) 8% 1.50 95,385 63,590 46,098 49,960

24. All farm models representing the results of the improvements confirmed the positive

financial impact of the project in enhancing their family incomes. As shown in the detailed

tables in the Appendix in project files, the project—through integrated on-farm and off-farm

investments—allowed for productivity increases together with irrigation cost reductions.

Household income increases after cost recovery ranges from 5 percent to 12 percent. The

improvements had a direct influence on the land market values of the improved areas which

show increases of about EGP 100,000 per feddan (about 50 percent) over the values before the

improvements varying with the location of the improved farms.

25. As a conclusion of the analysis, it can be said that the economic and financial analysis

confirmed that although having a lower impact than expected, the IIIMP had a positive impact

for the country and for the beneficiaries. The results confirm a way forward to significantly

improve water use efficiency in Egypt, agricultural productivity, and equity toward a shared

prosperity.

38

Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

Names Title Unit

Lending

Usaid I. El-Hanbali Consultant GWA07

Jose Simas Lead Water Resources Management

Specialist

Ghada Younes Senior Lawyer

Badr Kamel Senior Procurement Specialist GGO05

Hisham Waly Practice Manager GGO25

Hani El Sadani Senior Water Resources Engineer

Narasimham Vijay

Jagannathan Consultant IEGSD

Ayat Soliman Practice Manager GSU11

Marwa El-Moslemany Program Assistant

Supervision/ICR

Mohamed Yahia Ahmed Said

Abd El Karim Senior Financial Management Specialist GGO23

Abdulhamid Azad Lead Water Resources Management

Specialist GWA05

Nina Bhatt Practice Manager GSU03

Bekele Debele Negewo Program Leader EACCF

Ahmed Shawky M. Abdel

Ghany Senior Water Resources Specialist GWA06

Hani Abdel-Kader El Sadani

Salem Senior Water Resources Engineer

Akram Abd El-Aziz Hussein El-

Shorbagi Senior Financial Management Specialist GGO24

Wael Ahmed Elshabrawy Financial Management Analyst GGO23

Jamal Abdulla Abdulaziz Senior Procurement Specialist

Badr Kamel Senior Procurement Specialist

Maiada Mahmoud Abdel Fatt

Kassem Finance Officer WFALA

Enas Shaaban Mahmoud Program Assistant MNCEG

Heba Yaken Aref Ahmed Operations Analyst MNSWA

Claudine Kader Program Assistant GWA05

Mohab Halouda Senior Energy Specialist GEE05

Michael Sandoz Irrigation Consultant GFA03

Knut Opsal Lead Social Development Specialist GSU07

Mikael Sehul Mengesha Senior Procurement Specialist

Mohamed Mehani Operations Engineer

Jose Simas Lead Water Resources Management

Specialist

http://isearch.worldbank.org/skillfinder/ppl_profile_new/000300330

39

(b) Staff Time and Cost

Stage of Project Cycle

Staff Time and Cost (Bank Budget Only)

No. of staff weeks US$ Thousands (including

travel and consultant costs)

Lending

FY02 6.57 45.81

FY03 6.07 29.74

FY04 29.47 125.92

FY05 60.43 248.36

FY06 18.73 83.79

Total: 121.27 533.62

Supervision/ICR

FY06 14.04 35.90

FY07 49.42 165.70

FY08 47.36 205.20

FY09 34.66 206.88

FY10 17.07 95.77

FY11 19.55 89.52

FY12 23.38 136.39

FY13 11.45 75.26

FY14 20.00 105.08

FY15 16.05 89.57

FY16 27.34 160.85

Total: 280.32 1,366.12

40

Annex 5. Beneficiary Survey Results

A beneficiary survey was not undertaken.

41

Annex 6. Stakeholder Workshop Report and Results

A stakeholder workshop was not undertaken.

42

Annex 7. Summary of Borrower’s ICR and/or Comments on Draft ICR

Background

1. The IIIMP was originally a seven-year multidonor funded project implemented under the

Egyptian MWRI that aimed to enhance the management of irrigation and drainage and to

increase the efficiency of irrigated agriculture water use and services in the Mahmoudia and

Meet Yazid command areas in the Middle and West Delta. It addressed the water management

issues in the two command areas in an integrated and participatory manner.

2. The overall objective was to improve water distribution, quantity, quality, equity, and

timeliness and hence to increase agricultural production and alleviate poverty. Key elements to

achieve these goals were the rehabilitation and improvement of the water management

infrastructure. This was accompanied by institutional reform and user participation.

3. The IIIMP is regarded as a pioneer project where the policy reforms of integrated

planning and development of water management service through better integration of the MWRI

departments and other Government agencies are rolled out on a large scale.

4. The IIIMP implementation program was covered by five (5) components: (1) Improved

and Integrated Water Management; (2) Improved On-Farm Water Management; (3) Institutional

Development and Capacity Building; (4) Project Management, Coordination, and Integration;

and (5) Environmental Mainstreaming.

5. The IIIMP involved a great number of sectors and departments within the MWRI as well

as other ministries, in particular the MALR and Ministry of Electricity and Energy (MEE).

6. The framework for implementation, which was prepared during 2006, elaborated the

IIIMP project concept as defined in the PAD and consisted of two documents:

A Project Implementation Plan

A Project Implementation Manual

7. The activities and plans described in these documents are fully in line with the IIIMP

concept.

Partnership and Funding Arrangements

8. The main partnership arrangements included (a) a loan from IBRD for financing

infrastructural improvements and equipment, (b) an additional loan from KfW for financing

infrastructural improvements, (c) a grant from KfW for financing the TA services, (d) a grant

from the Netherlands Government for the preparatory phase and institutional development and

capacity-building activities relating to WUAs on the one hand and the MWRI on the other and

the rehabilitation of district buildings, and (d) the GOE with a national counterpart fund budget.

9. The original project duration covered a period of approximately seven years from March

2007 to March 2014. The original closing date of the IBRD loan was March 31, 2014. However,

43

because of the political unrest in Egypt (January 2011 and June 2013), which affected the

implementation progress of the IIIMP in various ways, in March 2014, the IBRD extended its

loan for another two (2) years up to March 31, 2016.

10. The original Netherlands Contribution Arrangement also covered a period of seven years,

that is, from 2006 to December 2013. For similar reasons, this closing date was extended for

three months up to March 31, 2014.

11. The original closing date for KfW funds (both Loan and Grant) was December 31, 2015;

again for similar reason this was extended to December 31, 2016. At present, a second extension

is being contemplated up to December 2017 to complete the ongoing activities in the KfW areas

of the IIIMP.

Summary of Implemented Activities

12. The IIIMP is implemented through the various departments of the MWRI and the MALR

(EALIP) and MEE and coordinated through a PMU and RCUs at regional level. The three RCUs

(in each of the three governorates) assist the PMU in the coordination, monitoring, evaluation,

and reporting. A Steering Committee has been established to provide strategic leadership for the

timely and effective implementation of the IIIMP. At the governorate level, the project

implementing sectors and partners are represented in a Regional Management Committee. The

TA for the IIIMP includes (a) individual consultants hired directly by the PMU (and financed by

the NDC) and (b) the main consultant Euroconsult Mott MacDonald in association with Mott

MacDonald (United Kingdom), CES (Germany), S&H (Egypt), and CBI (Egypt), financed

through the loan and grant from KfW.

13. Moreover, the PMU-IIIMP decided to make use of the MWRI’s in-house expertise in the

various disciplines to establish a cost-effective mechanism for implementing the different IIIMP

components through a number of task forces (TFs); the aim of these TFs was to facilitate the

preparation, coordination, and implementation of the various IIIMP activities.

14. The actual activities are summarized in Table 7.1:

Table 7.1. Summary of Activities

Component Subject Summarized Description Activities

Component 1 Improvement and

Integrated Water

Management -

investigations,

design, and

supervision

Main canals: 27 completed contracts, of which 13 on Mahmoudia main

canal and 14 on Meet Yazid and Zawia main canals.

Branch canals: 36 completed contracts, 2 contracts ongoing, and 5

contracts planned.

Mesqa improvement works: Completed 85,347 feddans and expected

95,532 feddans.

Electricity medium and low voltage networks: Completed 3 contracts,

ongoing 16 contracts, and planned 8 contracts.

Marwa development: 24,546 feddans completed and 9,525 feddans to

be completed.

Rehabilitation of open drains: 10 contracts.

Rehabilitation and new constriction of SSD: 97,982 feddans under

contract, of which 95,385 feddans was completed at IBRD closure date

(this figure included 2,458 feddans completed of new SSD systems with

44


a remainder of 1,342 feddans to be completed).

Activities for mesqa WUAs and irrigation improvement: Preparation of

designs and tender documents for 95,532 feddans of mesqa

improvement. This included support for farmer participation and

developing the capacity of the WUA to manage and operate the new

infrastructure.

Activities for SSD improvement have contributed to the preparation of

SSD improvement in 97,982 feddans. To date, approximately 97,982

feddans are awarded to contractors and more than 95,385 feddans

(112% of adjusted project target) of SSD was completed by March

2016.

Activities for preparation for installation, commissioning, and operation

of ultrasonic flow measurement devices, together with the MWRI

Telemetry Directorate, who were involved in USFM calibration and

commissioning.

Activities for main system improvement: PMU and HEPS in the field

investigation, preparation of tender documents and the procurement

process, and construction supervision of contracts.

Component 2 Improved On-Farm

Water Management

Water crop management adaptive research

Adaptive research for SRI: The PMU selected 80 feddans to pilot the

rice intensification system in the Nekla command area, which was taken

over by EWRMP project in January 2014.

Investigations for water management under controlled drainage: In total,

300 feddans of controlled drainage was piloted and farmers were trained

in El Baradei area; this was also taken over by the EWRMP in January

2014.

On-farm demonstrations and farmer excursions: The W10 demonstration

area (4,500 feddans) was implemented and used to demonstrate improved

marwa development and LLL in improved mesqa areas. Moreover, farmer

excursions were organized to show farmers to show the benefits of such

improvements. Some 7,000 feddans of LLL was implemented; these LLL

activities are continued under the FIMP.

Irrigation advisory support services strengthening: This included setting

up a number of CF pilot areas (most advanced being the Nekla Pilot

scheme) and training of concerned WUAs and BCWUAs (farmers) and

the MWRI staff in preparing them for continuous flow irrigation as an

alternative to rotational flow; this was also taken over by the EWRMP in

January 2014.

Other activities included capacity building (training for trainers courses)

for IAS and CDIAS extension staff in coordination with the MWRI

Training Center.

Component 3 Institutional

Development and

Capacity Building

This component mainly covered the establishment and strengthening of

IWRIGDs, IWMDs, DWBs, BCWUAs, and WUAs.

308 BCWUAs have been established.

Nine DWBs have been established.

2,070 WUAs have been established.

1,162 mesqas handed over to the WUAs and these now have full

operational responsibility.

Three IWRIGDs were established, activated, and strengthened in

Beheira, Gharbia, and Kafr El Sheikh.

21 IWMDs were to be established.

Total number of trained beneficiaries: 15,525 (13,684 males and 1,926

females).

Total number of the MWRI staff trained: 1,261 (1,699 males and 370

45


females).

Component 4 Project

Management,

Coordination, and

Integration

Support to the PMU and RCUs: Under this component, support was given

for the establishment and operation of the PMU and the three RCUs.

Moreover, a number of TFs were established for coordination of activities.

The following TFs were involved: TF for high-level project coordination;

TF for project coordination; TF for procurement, documentation, and

finance.

Support for setup and execution of M&E program: Monitoring of the

project’s implementation progress and comparison with the overall work

plan for the infrastructure works involved in the IIIMP; maintaining a

database for monitoring the progress of contract implementation and

interim payments; monitoring water levels which are automatically

registered by the WMRI at several locations in the monitored canals and

drains, as well as data such as cropping patterns, productivity, salinity,

pump operations, and irrigation practices. These water levels were used

for estimating performance indicators; periodic evaluations on WUO

functioning are carried out by the PMU and progress reporting on

procurement and construction works. The PMU relied on information

provided by the IIS, EPADP, HEPS, and RSUs. The PMU, assisted by the

TA consultant, regularly prepared a revised ‘Procurement Plan’ to

facilitate and streamline monitoring of the procurement and

implementation of construction works.

Impact, performance, and progress M&E: Two studies were prepared by

contracting E-Leaf (formerly WaterWatch). These studies (covering the

summer/winter season of 2008–2009 and the winter and summer season of

2013–2014) included remote sensing studies to analyze parameters related

to water use and agricultural productivity, with the aim of assessing the

impact of irrigation modernization interventions in the Nile Delta. These

parameters are valuable indicators of the quantity, quality, and timeliness

of water delivery.

The first study formed an important input for the Baseline Study, which

was prepared in 2009–2010 for summer/winter 2008–2009.

The outcome of both studies represents an important element of the IIIMP

M&E activities for both the baseline study and completion report.

Component 5 Environmental

Mainstreaming

Public awareness and information campaigns: Prepared awareness

building pamphlets on relevant environmental issues and the distribution

thereof.

Performance-based environmental M&E: Activities included collection

and analysis of environmental monitoring data. A water quality measuring

program was implemented by the WMRI, which formed part of the

monitoring activities, mentioned under Component 4

Technical studies and management plans - activities included:

An update on the ESMP in 2010.

A scoped Environmental Impact Assessment for dredging of main

canals in 2011.

Social mitigation studies before tendering of some of the main canal

improvement works.

Social studies concerned with illegal squatters on the banks of the

Mahmoudia Canal in 2011.

An updated RAP in 2011.

An ESMP for Nishil and Sharaf drains in Gharbia and Beheira,

respectively, in 2013 and the preparation of design and tender

documents.

Institutional capacity building: Environmental training courses were

46


conducted for district drainage engineers of the IWRIGDs and formed part

of the overall capacity-building training program reported under

Component 3.

General WUO and the

MWRI staff

institutional

training sessions

Throughout the implementation period of the IIIMP, the institutional

strengthening and capacity-building activities included training courses,

workshops, seminars, and some overseas study tours for IWM staff and

involved the MWRI project staff.

Procurement of

Goods and

Services

From 2007 to 2016, procurement of goods and services were financed

using IBRD and NL-CA funds. The goods were mostly procured using the

International Competitive Bidding and National Competitive Bidding

procedures and through a shopping procedure, if within the required

budget ceiling.

Table 7.2. Summary of IIIMP Progress up to March 31, 2016

Item Unit

Target at

Completion

MTR

Total

Estimated

Cost in LE

Awarded up

to March 31,

2016

Implemented

up to March

31, 2016

%

Implemented

Compared to

Target

Civil works

Main canal LE 150,000,000 150,000,000 168,130,031 167,802,933 111

Branch canal LE 81,200,000 81,200,000 159,978,649 146,189,505 180

Mesqa

improvement

Feddan 85,000 777,955,000 95,532 85,347 100

Electrical

networks

LE 142,000,000 142,000,000 139,282,000 104,727,000 74

Mara

development

Feddan 30,000 58,750,000 34,071 24,546 82

SSD Feddan 85,000 221,500,000 97,982 95,385 112

Open drains Contract 8 28,400,000 10 10 125

Institutional activities

Established

IWMDs

District 22 9,450,000 22 22 100

Established

DWBs

DWB 11 600,000 9 9 82

Established

BCWUA

BCWUA 308 2,345,000 308 308 100

Established

WUAs

WUA 1,618 1,100,000 2,341 2,070 130

Handover

WUAs

WUA 1,530 — 1,162 1,162 76

Note: IWMDs were established, but one IWMD was transferred from IWRIGD Gharbia to IWRIGD New Zifta.

Summary of Budget and Expenditures

15. Actual expenditures up to the end of March 2016 amounted to US$247.35 million, of

which US$118.56 million for IBRD, US$60.93 million for KfW, US$10.76 million for NL-CA,

and US$57.71 million for the GOE (see table 7.3).

Table 7.3. Actual Project Expenditures (US$, millions) up to

Project Component Budget

PAD

Budget

Revised

Actual Expenditures up to March 2016

IBRD KfW NL-CA GOE Total

1. Improved and Integrated 224.90 116.00 58.40 0.26 49.99 224.65

47

Project Component Budget

PAD

Budget

Revised

Actual Expenditures up to March 2016

IBRD KfW NL-CA GOE Total

Water Management

2. Improved On-Farm Water

Management 4.60 0.21 0.00 0.12 0.25 0.58

3. Institutional Development and

Capacity Building 14.30 1.13 0.00 5.69 2.35 9.17

4. Project Management,

Coordination, and Integration 11.00 1.23 2.53 4.66 5.09 13.49

5. Environmental Mainstreaming 5.00 0.01 0.00 0.03 0.03 0.07

Subtotal 259.80 118.56 60.93 10.76 57.71 247.96

Price and physical

contingencies 40.20 n.a.

Total 300.00 118.56 60.93 10.76 57.71 247.96

16. Note that the figures for expenditures are as mentioned in the FMR report, dated March

31, 2016. Moreover, for IBRD, we use actual exchange rate (before used US$1.00 equivalent to

LE 5.50). For KfW, NL-CA, and GOE, an exchange rate of LE 5.50 to the U.S. dollar was used.

By June 1, 2016, the total amount of the IBRD loan (US$120 million) was disbursed, as notified

by the IBRD disbursement section (the IIIMP obtained a grace period up to July 31, 2016).

Cost Recovery

17. Law 213 of 1994 provides for recovery of mesqa improvement costs from the landowners

benefiting from such investments.25

The costs of pump sets are repaid within 3 years, while

repayment of the cost of civil works takes place over 20 years. Costs are repaid without interest.

Taken together with the fact that there is usually a significant delay between the time when the

investments are made and the start of repayments, this means that, particularly in the case of the

civil works, that there is a significant element of subsidy.

18. Collection of the instalments is the responsibility of the LTA. After deduction of fees for

the LTA and IIS, the amount collected is paid into a revolving fund which is intended to be used

for further mesqa improvement.

19. Until 2013, arrangements to start the cost recovery were delayed while a decision was

being awaited as to whether the costs of electrification (low-voltage networks), should also be

included. During summer 2013, a formal decision was made by the MWRI in conjunction with

the Ministry of Finance that the costs of the low-voltage networks should be taken into account

for the cost recovery, with repayments to be made over 15 years.

Summary of Main Lessons Learned

General

Initial indications show that costs and irrigation time have decreased after the

improvement of the mesqa and the establishment of WUAs.

25

Similar arrangements exist for subsurface drainage works implemented by the EPADP.

48

Improved water flows have increased crop yields, particularly at the tail end of

improved branch canals.

Increased women participation has been observed in some WUAs and BCWUAs.

Conflicts between farmers on the same mesqa have decreased after improvement

works were completed.

The exposure to contaminated irrigation water supply has been reduced at the tail

end of the system through the provision of mesqa pump stations.

Land saving because of buried feeder pipelines from the offtakes to mesqa pumping

stations and buried feeder lines and hydrants when developing the marwas.

The increase in land value because of improved farm infrastructure and improved

environmental conditions was not taken into account in the economic analysis model

used.

Electrification of Mesqa Pumping Stations

25. The Electricity Distribution Companies (EDCs) are responsible for the development and

O&M of electricity distribution and as such they are best placed to undertake the additional work

rather than awarding yet more contracts to private and state enterprises.

Farmer Objections

26. The use of a more flexible, yet firm approach to farmer participation could reduce

problems during later stages, though this may result in more fragmented construction sites. The

farmers themselves have to accept that the opportunity to participate brings with it

responsibilities to ensure that all the farmers with a stake in a mesqa are fully involved in the

development process and that they all accept the mesqa layout and other conditionalities.

Continuous Flow

27. A key requisite for continuous flow is the ability to measure and regulate flows into the

branch canals and at present only a limited number of flow measurement devices have been

installed. The regulation of flows into branch canals, particularly during periods of low flow or

high demand, has to be equitable and transparent so that farmers are able to check the flows into

neighboring canals. Until such time as all the branch canals have a flow meter with visual

display, this is not possible.

BCWUAs

28. There have been a number of projects to establish and build the capacity of BCWUAs

and DWBs; however, neither of these bodies have any legal status under Law 213 of 1994,

which amends the Irrigation and Drainage Law 12 of 1984. Given the necessary powers,

BCWUAs would have an important role in any future plans to introduce Integrated Water

49

Resources Management, whereby users have a greater stake in the management and O&M of the

infrastructure.

Establishment, Strengthening, and Operating of WUOs

29. The overall manpower and technical staff within IAS and CDIAS involved in this work

was underestimated, more so if this same staff was involved in participatory design activities and

problem solving during construction.

30. The introduction of an IWM system requires a long-term effort well beyond the

completion date of the project and its construction activities.

Monitoring and Evaluation

31. Establishment of a centralized management information system would considerably

streamline activities and information flows. The management information system should contain

data on contracts signed, implementation progress, and individual target objects (for example,

main and branch canals, mesqas, marwas, WUAs).

32. Remote Sensing Analysis (RSA) can provide additional dimensions. Main contributions

of RSA to results monitoring improvements in irrigation and drainage have been the high

reliability when identifying main cropping pattern, the overall calculation of water consumption,

and crop growth/biomass. The outcomes of RSA and field monitoring ideally support each other.

Aligning seasonal RSA with field monitoring activities is considered essential.

33. In view of small average field sizes in the Egyptian Delta, the use of high-resolution

images (<10 m) should be considered to reduce interference of different crops grown in adjacent

fields. As high-resolution images are more costly, certain study areas could be carefully selected,

for example, in line with field surveys being done.

Post-completion Support in General

34. The implementing agencies are all project oriented and once the works are complete,

there is no support for the farmers in terms of specialist training, workshop, and spare parts;

building the capacity of the WUA, IWMDs, and DWBs; operation and management of irrigation

infrastructure; and so on. In theory, the MALR is charged with agricultural extension, but this

tends to focus on crop and livestock production, not on the particular skills needed to operate an

irrigation system efficiently. It would be relevant to reserve a special budget line within the

MWRI Training Center overall annual budget allocation for training and strengthening of

farmers (WUAs), IWMDs, and DWBs.

Main Conclusion and Recommendations

35. The IIIMP is widely considered as a pioneer project, where the policy reforms of

integrated planning and development of water management service through better integration of

the MWRI departments and other Government agencies are rolled out on a large scale.

50

36. Implementation of the IIIMP to date has been difficult because of complex conditions in

the field, including the political upheavals during 2011 and 2012, which extended to the rural

areas being served and the limited capacity of some local contractors; the combination of these

factors caused delays in implementation, which could not be foreseen at the start-up of

implementation and as a consequence also had their effect on the disbursement rate.

37. However, with the approved extension of the IBRD loan from March 2014 to March

2016, the IIIMP managed to use the completed IBRD loan of US$120 million and fulfilled most

of the revised results indicators, which were amended during the MTR.

38. Long-term sustainability of the IIIMP, however, requires additional support, especially in

the field of capacity building of beneficiaries, to ensure long-term sustainability. The IIIMP has

created an unprecedented momentum and expectations within the Delta region and its local

population. However, not all expectations have been met as yet. Nevertheless, the contribution in

the field of institutional strengthening and capacity building within the IIIMP implementation

program, particularly with regard to the WUOs, has been of primordial importance and remains

important.

39. The MWRI foresees a continuation in the field of mesqa development in other parts of

the Nile Delta and Upper Egypt, building on the experiences gained under the IIIMP.

40. With the experiences gained, however, the PMU would propose to have the existing

Agricultural Cooperatives actively involved in the establishment of the WUAs instead of the IIS

as they have a more intimate knowledge of the farmers’ organizational structures at the field

level, whereas the IIS has limited staff available for such activities, particularly so when the IIS

has to be involved at the same time in the designs and construction supervision.

41. In such a case, the MWRI could arrange for a protocol between the MWRI and these

agricultural cooperatives.

42. Moreover, in any future endeavor we would recommend having a separate loan in

parallel with the MEE to provide for electricity networks in the future areas of mesqa

improvement without the direct inference from the MWRI, similar to the scenario of Assuit

Barrage (where the loan for civil works is assigned to the MWRI and a separate loan is assigned

to the MEE). If the pilot(s) of supplying solar energy for the mesqa pumping stations show that

this is a feasible option, this could become an alternative energy source.

51

Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders

From: KfW

We are largely in agreement with your ICR findings:

Despite the undisputed achievements made in terms of an improved equitable water distribution

to the mesqas in conjunction with notably increased water productivity and very significant

improvements made in the management of irrigation and drainage participation (WUAs), the

overall project success was nevertheless constrained by:

A) The failure to deliver electrical power to all individual MESQA pumping stations within

the implementation period, which hampered full development of operational WUA and limited

mobilization of operation cost saving potentials.

B) The project cost was higher than expected. Assessment of overall readiness and

preparedness to execute this complex project was possibly too optimistic, leading to longer

project execution durations, additional cost, and resulting in lower than expected ERR.

C) The positive effects of the continuous flow concept did not materialize. Indeed, despite

its pivotal role, at the heart of the IIP’s and the IIIMP’s concept, continuous flow was never

implemented and is not being implemented. Any pilots in this direction have only been

misleading for farmers, as they were actually providing continuous flow, without any limitation

of water volume. Moreover, the MWRI is, at policy level and publicly in relation to farmers, still

pretending to be pursuing continuous flow, implementing such misleading pilots. What is

pending is the MWRI abandonment of continuous flow, at policy level and clearly

communicated to farmers.

D) IWMD. The introduction of IWMD has not been consequently implemented. Partly such

introduction is not properly functional due to lack of staff and budget, partly it is even being

reversed.

From: NDC (Netherlands Development Corporation)

General

The Dutch contribution toward the IIIMP was in the order of EUR20 million, divided into three

components. One components was to provide TA to the MWRI for mainly institutional aspects

such as the establishments of water boards, and so on to prepare the ground for the infrastructural

improvements which would be brought about by the World Bank loan upon loan effectiveness.

This component started prior to loan effectiveness and continued well into loan effectiveness.

This TA component established procedures to expand participatory water management into,

among others, the commander areas of Mahmoudia and Meit Yazid (IIIMP project area). It also

introduced and institutionalized training of the MWRI staff (IASs) to ensure continuity of

training at all levels well after this component was completed. Under this component, a number

of important tests and experiments were performed relating to volumetric distribution in canals

as opposed to level distribution under continuous flow.

52

The other two components provided under Dutch development cooperation were both financial

assistance toward the IIIMP to help the MWRI to continue to provide training, and so on and

carry out the skills acquired under the TA program after that was completed. This component

helped establish and operationalize water boards/WUAs, branch, and DWBs, and so on. It was

complementary to the loan and was to be used for all activities which the loan could not be used

for under Egyptian regulations (such as procurement of TA and consultancy services). The

MWRI was reluctant to purchase expatriate consultancy services mainly due to the red tape

involved in the process; however, national consultants were recruited when necessary under this

component.

The third component, also financial assistance, was used to finance the feasibility study

mentioned in the ICR which was subsequently used as the basis for the Integrated Sanitation and

Sewerage Infrastructure Project cofunded by the World Bank and KfW, and so on. I feel this

should somehow be included in the ICR report for completeness. It also tends to set the

framework in general and provides answers where questions could be asked especially those

pertaining to continuity and sustainability.

There were a number of more specific comments:

On the conversion of diesel pumps to electrical units:

The cost of irrigation has been reduced from EGP300 to what amount? From my

personal experience, since the price of diesel fuel has been increased, the difference

between the two means of pumping has widened even further in favor of electricity

being the cheaper.

Farmers take over with diesel units. How is this in proportion to environmental

sustainability? How many farmers are taking over with diesels? Are other solutions

possible? How does this impact the remarks on mitigating climate risks?

What kind of training is needed? Can there be some more detail in the areas that still

have to be covered?

On the role of women in water management:

Contrary to indication in this paragraph, women were very much targeted under the

TA component of the IIIMP. Provisions are in place to ensure that a certain number

of women are elected members of water boards, WUAs, and so on. The IIIMP

collected and reported on gender segregated data in all soft aspects of the project. It

is probably correct that not many landowners in these command areas are women;

nevertheless, it is a fact that women are also very much involved in water

management. Kindly amend the said paragraph accordingly.

On the Overall Outcome Rating:

Is moderately satisfactory not a bit too modest? Satisfactory (as in between

‘moderately satisfactory’ and ‘high’) seems to be more in place.

53

Annex 9. List of Supporting Documents

Loan Agreement (Loan number 7291 EGT). Integrated Irrigation Improvement and

Management Project, May 12, 2005

Project Appraisal Document. Integrated Irrigation Improvement and Management Project,

April 7, 2005

Supervision Missions’ Aide Memoires from 2005 to 2016

Midterm Review Report. Integrated Irrigation Improvement and Management Project, May

2012

Restructuring Paper IIIMP, October 2012.

Restructuring Paper IIIMP, March 2014.

Restructuring Paper IIIMP, December 2015.

World Bank Group Country Assistance Strategy for the Arab Republic of Egypt for the

Period FY06–FY09 IBRD and IFC, May 20, 2005, Middle East and North Africa Region

World Bank Group Country Partnership Framework for the Arab Republic of Egypt for the

period FY 2015–2019, November 2015

Integrated Water Resources Management Plan, MWRI, June 2005

Irrigation Improvement Project, ICR, June 2007

Arab Republic of Egypt, Sustainable Agricultural Development Strategy Towards 2030,

Cairo, 2009

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MAP